The Sc ottish Parliament and Scottis h Parliament Infor mation C entre l ogos .

Financial Scrutiny Unit Briefing

Earnings in Scotland 2015 10 December 2015 15/82 Andrew Aiton The Office for National Statistics released the Annual Survey of Hours and Earnings (ASHE) 2015 provisional results on 18 November 2015. This briefing provides a brief overview of earnings in Scotland.

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CONTENTS ANNUAL SURVEY OF HOURS AND EARNINGS (ASHE) DATA ............................................................................. 3 ANNUAL PAY .............................................................................................................................................................. 3 WEEKLY PAY .............................................................................................................................................................. 4 PUBLIC/PRIVATE SECTOR PAY ............................................................................................................................... 4 PAY BY AGE ................................................................................................................................................................ 5 PAY BY INDUSTRY ..................................................................................................................................................... 6 PAY BY LOCAL AUTHORITY OF WORKPLACE ...................................................................................................... 6 EARNING TRENDS ..................................................................................................................................................... 8 PAY INEQUALITY ........................................................................................................................................................ 8 ANNEX ....................................................................................................................................................................... 10 SOURCES .................................................................................................................................................................. 12 RELATED BRIEFINGS .............................................................................................................................................. 14

ANNUAL SURVEY OF HOURS AND EARNINGS (ASHE) DATA The data in this briefing are taken from the Annual Survey of Hours and Earnings (ASHE) 2015 provisional results, published by the Office of National Statistics (2015a). The survey provides a range of earning statistics for employees across the UK. It does not cover the self-employed. ASHE is based on a 1% sample of employee jobs taken from the Pay As You Earn (PAYE) records of Her Majesty Revenue and Customs (HMRC) covering the pay period over the year to 5 April 2014. Key points about the data: 

 



Where figures are adjusted for inflation, the April 2015 Consumer Price Inflation (CPI) figure, -0.1%, has been used. CPI is appropriate in this instance as it is used for uprating pensions, wages and some benefits and can aid in the understanding of the impact of inflation on family budgets. Because of the potential for sampling errors for smaller groups, including local areas and small industries, there is a wider margin of error with some of the data than for Scotland as a whole. Unless otherwise stated the median estimate has been used rather than mean average as it provides a better indication of ‘typical’ pay. Median values split the top 50 per cent from the bottom 50 per cent meaning it is less likely to be skewed by the relatively small number of very high earners. ‘Full-time’ is defined as employees working 30 paid hours per week or more (or 25 or more for the teaching professions).

ANNUAL PAY Figure 1: Scottish and UK Annual Full-Time Pay 2015

Scotland £27,710

UK £27,645

2.5%

1.6%

Median gross full-time annual pay in Scotland increased by 2.5% in cash terms over the year to April 2015, with the UK seeing an increase of 1.6%. Both Scotland and the UK generally saw real terms increases. For the first time since 1997, when ASHE started, median gross full-time pay in Scotland is higher than the UK average. Only London and the South East have higher median gross full-time annual pay levels.

Table 1: Gross annual pay for full-time employees - 2015 Median Scotland UK

£27,710 £27,645

Annual percentage change Cash (%) Real (%) +2.5 +1.6

+2.6 +1.7

The median gross annual pay for part-time employees in Scotland is higher than the UK average and increased at a higher pace than that of the UK. Part-time and full-time pay in Scotland and the UK generally has increased in real terms over the year. Table 2: Gross annual pay for part-time employees - 2015 Median Scotland UK

£9,837 £9,275

Annual percentage change Cash (%) Real (%) +4.1 +3.1

+4.2 +3.2

WEEKLY PAY Full-time gross weekly earnings in Scotland increased at a lower rate than the UK over the year and remains slightly below the UK average.1 However, only London and the South East have higher full-time gross weekly earnings than Scotland. Table 3: Gross week pay for full-time employees - 2015 Median Scotland UK

£527 £528

Annual percentage change Cash (%) Real (%) +1.4 +1.8

+1.5 +1.9

Part-time weekly pay in Scotland is higher than the UK average. However, part-time weekly pay in Scotland grew at a slower rate that the UK as a whole over the year. Table 4: Gross weekly pay for part-time employees - 2015 Median Scotland UK

£175 £167

Annual percentage change Cash (%) Real (%) +1.1 +3.7

+1.2 +3.8

PUBLIC/PRIVATE SECTOR PAY The reasons for the differences in private and public sector pay levels are complex ‘because of the different jobs and characteristics of the people within each sector’ (see ONS briefing). In order to address some of these issues the figures used for comparing the public and private sector in this briefing are hourly pay excluding overtime. This helps to control for the difference in the length of the working week. 1

Annual earnings in Scotland are higher than the UK while weekly earnings are slightly lower. It should be noted that all results are based on survey data; there is a margin for error in all figures. Care should be taken when analysing very small differences.

Private sector pay in Scotland grew at a higher rate the public sector over the year. However pay in the public sector is still higher than in the private sector. The difference between public and private sector pay in Scotland is slightly higher than the UK as a whole. Figure 2: Hourly pay excluding overtime for Public and Private sector employees - 2015 £14.56

£14.48 £10.67

£10.44

Public

Private

Public

Private

Scotland

UK

Full-time workers in the public sector saw a decrease in hourly pay excluding overtime over the year. However full-time hourly pay is higher in the public sector. Full-time hourly pay excluding over-time in the private sector saw the largest increase. Figure 3: Hourly pay excluding overtime for public and private sector employees in Scotland - Full-time and Part-time - 2015 £15.76 £11.99

£11.48 £7.52

Public

Private

Public

Full-Time

Private Part-time

PAY BY AGE Median gross weekly pay increased across all age groups in Scotland and the UK generally. In Scotland the 22-29 age group saw the largest increase in wages while the over 60 age group saw the smallest increase. Table 5: Gross week pay for all employees by age - 2015

Median Age 18-21 Age 22-29 Age 30-39 Age 40-49 Age 50-59 Age 60+

£200 £371 £480 £488 £456 £347

Scotland Annual change Cash (%) Real (%) 0.4 0.5 3.1 3.2 2.4 2.5 2.5 2.6 2.1 2.2 0.1 0.2

Median £201 £383 £490 £493 £458 £339

UK Annual change Cash (%) Real (%) 4.0 4.1 3.2 3.3 1.1 1.2 2.6 2.7 2.5 2.6 1.9 2.0

PAY BY INDUSTRY The mining and quarrying industry in Scotland has the highest median hourly rate excluding overtime, this would include those employed in the offshore oil and gas sector. The financial and insurance activities industry saw the largest increase in median hourly pay excluding overtime in Scotland. The accommodation and food services industry has the lowest hourly rate excluding overtime despite seeing the second largest percentage increase in earnings over the year. Accommodation and food service activities’ is the only sector to have a median wage below the living wage rate of £7.85 an hour. Figure 4: Median hourly pay excluding overtime by industry (£) - 2015 Mining and quarrying

20.61

Electricity, gas, steam and air conditioning supply

17.84

Financial and insurance activities

16.62

Information and communication

14.93

Professional, scientific and technical activities

14.81

Education

14.80

Public administration and defence; compulsory…

14.71

Manufacturing

12.97

Real estate activities

12.65

Construction

12.50

Human health and social work activities

12.27

Water supply; sewerage, waste management and…

11.95

Scottish median

11.92

Transportation and storage

11.62

Agriculture, forestry and fishing

9.88

Administrative and support service activities

9.31

Other service activities

9.27

Arts, entertainment and recreation

9.00

Wholesale and retail trade; repair of motor vehicles… Accommodation and food service activities

8.25 7.00

Data for Figure 2 is available in the annex.

PAY BY LOCAL AUTHORITY OF WORKPLACE The following section looks at median hourly pay excluding overtime by local authority of employee workplace. Aberdeen City is the local authority with the highest median hourly income excluding overtime. East Renfrewshire has the lowest median hourly income excluding overtime and saw the second largest decrease over the year. Argyll and Bute saw the largest increase over the year. It is worth emphasising that this data is for place of work, not residence.

Figure 5: Hourly pay excluding overtime by local authority of work - 2015

Median hourly pay excluding overtime by local authority of work - 2015 Between £9.60 and £10.15 Between £10.15 and £10.95 Between £10.95 and £11.83 Between £11.83 and £14.08

Data for Figure 3 is available in the annex.

EARNING TRENDS The indicator used by the ONS when looking at earning trends is median full-time gross weekly earnings. Wages across the UK as a whole have increased in real terms over the year which is the first time since 2008. The ONS highlight that this is “due to a combination of growth in average earnings and a low level of inflation.” However this is the second year in a row that Scotland has seen above inflation increases in wages.

Annual Cahnge (%)

Figure 6: Increase in earnings and CPI: 2007 onwards 5

CPI

4

Scotland UK

3 2 1

0 -1 2007

2008

2009

2010

2011

2012

2013

2014

2015

Since 2008 median full-time gross weekly pay in Scotland has fallen 0.5% in real terms. However this is less than the UK average which has seen a 5.2% drop in real terms wages since 2008.

PAY INEQUALITY When looking at gross weekly income the ONS highlights that at the UK level “each year since 1997 earnings at the 90th percentile have remained consistently at around 3.5 times that of the 10th percentile.” The Scottish data shows that the 90th percentile, those on the top 10% highest income, has decreased from 3.4 to 3.2 times that of the 10th percentile, those on the lowest income. The 10th percentile of earners in Scotland has seen an 81% increase in wages in cash terms, or 27% on real terms, since 1997 while the UK has seen a 71% increase in cash terms, or 20% in real terms. While this comparison is useful the increase in the wage of lowest earners is impacted by changes in the National Minimum Wage. Therefore it is useful to compare the 90th percentile earners with the median income. The gap between median income and those in the 90th percentile is lower in Scotland and has remained relatively unchanged since 1997, around 185% of median income. However the UK has seen an increase from 187% to 196%.

Figure 7: 90th percentile gross weekly income as a percentage of median gross weekly income since 1997 205% UK

200%

Scotland

195%

190% 185% 180%

175%

1997

2000

2003

2006

2009

2012

2015

ANNEX Table A1: Hourly pay excluding overtime for Public and Private sector employees - 2015 Sector Scotland UK

Public Private Public Private

Median £14.56 £10.44 £14.48 £10.67

Annual percentage change Cash (%) Real (%) +1.0 +1.8 +1.5 +1.7

+1.1 +1.9 +1.6 +1.8

Table A2: Hourly pay excluding overtime for public and private sector employees in Scotland - Full-time and Part-time - 2015 Sector Full-Time Part-time

Public Private Public Private

Median £15.76 £11.99 £11.48 £7.52

Annual change Cash (%) Real (%) -0.2 +2.8 +1.0 +0.5

-0.1 +2.9 +1.1 +0.6

Table A3: Hourly pay excluding overtime by industry Industry Accommodation and food service activities Administrative and support service activities Agriculture, forestry and fishing Arts, entertainment and recreation Construction Education Electricity, gas, steam and air conditioning supply Financial and insurance activities Human health and social work activities Information and communication Manufacturing Mining and quarrying Other service activities Professional, scientific and technical activities Public administration and defence; compulsory social security Real estate activities Scottish median Transportation and storage Water supply; sewerage, waste management and remediation activities Wholesale and retail trade; repair of motor vehicles and motorcycles

7.00 9.31 9.88 9.00 12.50 14.80 17.84 16.62 12.27 14.93 12.97 20.61 9.27 14.81

Annual change (%) 5.5 1.2 3.9 -1.1 0.7 3.1 2.5 7.8 2.2 4.1 5.5 2.0 -5.2 -1.4

14.71 12.65 11.92 11.62

1.1 -0.4 1.9 3.3

11.95

0.7

8.25

3.1

Median (£)

Table A4: Hourly pay excluding overtime by place of work

Aberdeen City Aberdeenshire Angus Argyll and Bute City of Edinburgh Clackmannanshire Dumfries and Galloway

14.08 11.00 10.35 12.34 13.61 11.25 10.11

Annual Change (%) 3.6 4.8 2.1 18.3 -0.4 12.5 2.6

Dundee City East Ayrshire East Dunbartonshire East Lothian East Renfrewshire Eilean Siar Falkirk Fife Glasgow City Highland Inverclyde Midlothian Moray North Ayrshire North Lanarkshire Orkney Islands Perth and Kinross Renfrewshire Scottish Borders Shetland Islands South Ayrshire South Lanarkshire Stirling West Dunbartonshire Scotland

12.29 10.95 10.15 10.5 9.61 11.83 11.71 11.20 12.78 11.12 10.55 11.29 10.52 10.7.0 11.16 11.48 11.34 11.32 10.72 12.85 11.41 11.38 11.42 10.63 11.92

2.9 2.2 -0.3 -3.8 -4.0 3.9 5.6 4.6 0.8 0.2 2.7 3.1 4.0 -2.1 -0.7 -2.6 9.6 2.4 4.1 10.7 -1.0 -2.5 -0.5 -5.6 1.9

Local Authority

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Median (£)

SOURCES Office for National Statistics (ONS 2015a), Annual Survey of Hours and Earnings, 2015 Provisional Results Available online at: http://www.ons.gov.uk/ons/rel/ashe/annual-survey-ofhours-and-earnings/2015-provisional-results/index.html [Accessed 18 November 2015] Office for National Statistics (ONS 2015b), Annual Survey of Hours and Earnings, 2014 Revised Results Available online at: http://www.ons.gov.uk/ons/rel/ashe/annual-survey-of-hours-andearnings/2014-revised-results/index.html [Accessed 18 November 2015] Office for National Statistics (ONS 2015c), Public and Private Sector Earnings - November 2014 http://www.ons.gov.uk/ons/dcp171776_383355.pdf [Accessed 18 November 2015] Office for National Statistics (ONS 2015d), Annual Survey of Hours and Earnings (ASHE) WGOR by Age for 2014 revised and 2015 provisional, Available online at: http://www.ons.gov.uk/ons/about-ons/business-transparency/freedom-of-information/what-can-irequest/published-ad-hoc-data/labour/november-2015/index.html [Accessed 19 November 2015]

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RELATED BRIEFINGS SB 14-90 Earnings in Scotland 2014 SB 15-37 Disposable Household Income in Scotland 2013

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