The growth rate of average weekly earnings in the whole of the economy in the year to April 2022 was 6.8% on the total pay measure and 4.8% on the regular pay measure. The difference between the two measures is the consequence of very high bonuses paid in the period, especially in the finance and business services sector.
But behind these figures, there was a sharp difference between average earnings growth in the private sector and the public sector. The annual rate of growth in total pay in the private sector was 8.0% compared with an annual rate of growth of 1.5% in the public sector. The ONS commented that the difference is ‘among the largest we have seen’.
In the year to April, the CPI measure of inflation rose by 9.0% and the RPI measure rose by 11.1%, so the difference in the purchasing power of earnings between the private and public sectors is now quite stark.
A number of significant April pay awards are now overdue in the public sector, most notably in the NHS. Here the Government has indicated a limit of 3% to be applied to all salaries by the NHS Pay Review Body.
Average earnings growth in all major components of the private sector were strong. The highest rate of growth was in finance and business services, where the annual rate of growth in the year to April 2022 was 10.6%. This was almost unchanged from the rate of 10.7% in the year to March.
Elsewhere in the private sector, average earnings in manufacturing grew at an annual rate of 4.3% in the year to April, up marginally on a rate of 4.1% in the year to March. There has been a modest increase in earnings in manufacturing compared with rather low figures of around 2.5% in 2021.
The rate of growth in average earnings in construction has recovered in recent months. The rate of growth in April was 7.6%, up from 6.9% in the year March and up substantially from 2.9% in the year to January.
In wholesaling, retailing, hotels and restaurants, the largest and lowest paying sector of the economy, average earnings grew by 8.4% in the year to April. This rate was almost the same as the 8.5% in the year to March. Pay awards in this sector have been pushed upwards by labour market pressures and by the increase in the National Living Wage, which rose by 6.6% in April 2022.
Alastair Hatchett
Visiting Fellow, University of Greenwich
14 June 2022
