Alastair Hatchett | 12 Apr 2022

Average weekly earnings growth rate rises to 5.4%

Average weekly earnings grew by 5.4% on the total pay measure and 4.0% on the regular pay measure in the year to February 2022, according to the latest figures from the office for National Statistics (ONS). These figures are up on the earnings figures for January which were 4.8% on the total pay measure and 3.8% on the regular pay measure. Strong bonus payments, especially in the finance and insurance sector, boosted total pay growth in January and February.

Growth in average weekly earnings had been slowing in the final months of 2021 (the rate was 4.3% in December), but that trend was reversed in January, with a further increase in the latest figures. The recovering trend is partly based on a series of pay initiatives by employers in response to rising inflation, high vacancy levels and other labour market pressures. Indeed, in a further release from the ONS and HMRC, based on PAYE information, early estimates for March 2022 indicate that median monthly pay increased by 6.0% compared with a year earlier.

Private sector earnings growth is being driven strongly by developments in the finance and business services sector. The figure for the private sector in the year to February was 6.2%, up from 5.4% in the year to January. The rate of growth in finance and business services was 9.8%, up from 8.6% in the year to January. This strong growth is in large part from higher bonuses this year compared to early 2021. Regular pay growth in finance and business services was lower at 6.0%, and was actually down on the previous month, when it stood at 6.2%. Meanwhile, growth in other parts of the private sector was also lower than in finance and business services, for example at 6.4% on the total pay measure in hotels, restaurants and retail, and 5.9% on the same measure in ‘services’, which includes transport and communications. The respective regular pay measures, which exclude the effect of bonuses, were 5.6% and 4.3%. Many pay awards in both these sectors have been higher in response to labour market pressures and the increase in the National Living Wage of 6.6% from April 2022.

But while private sector earnings growth has strengthened, public sector earnings growth has weakened. In the year to February, earnings here grew by just 2.0%, down from 2.3% in the year to January, which in turn was down on 2.7% in the year to December 2021.

Elsewhere in the private sector, average earnings growth in manufacturing was 3.0% in the year to February, up slightly on 2.9% in the year to January. Average earnings growth in construction in the year to February rose to 3.7% in February, up from 2.9% in January.

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