Earnings and employment from Pay As You Earn Real Time Information, UK - January 2023

17th January 2023

Early estimates for December 2022 indicate that the number of payrolled employees rose by 2.3% compared with December 2021, a rise of 676,000 employees; the number of payrolled employees was up by 3.1% since February 2020, a rise of 888,000.

Payrolled employment increased by 28,000 employees (0.1%) in December 2022 when compared with November 2022, though this should be treated as a provisional estimate and is likely to be revised when more data are received next month.

UK payrolled employee growth for November 2022 compared with October 2022 has been revised from an increase of 107,000 reported in the last bulletin to an increase of 70,000, because of the incorporation of additional real time information (RTI) submissions into the statistics, which takes place every publication and reduces the need for imputation.

Early estimates for December 2022 indicate that median monthly pay increased by 7.7% compared with December 2021, and increased by 17.9% when compared with February 2020.

All age groups saw an increase in payrolled employees between December 2021 and December 2022; there was an increase of 83,000 payrolled employees aged under 25 years.

For Nomenclature of Territorial Units for Statistics (NUTS) 3 regions, annual growth in payrolled employees in December 2022 was the highest in Tower Hamlets, with a rise of 6.1%, and was lowest in the Scottish Borders, with a rise of 0.8%.

The increase in payrolled employees between December 2021 and December 2022 was largest in the health and social work sector (a rise of 115,000 employees) and smallest in the wholesale and retail sector (a fall of 37,000).

Annual growth in median pay for employees in December 2022 was highest in the education sector (an increase of 15.7%) and lowest in the transportation and storage sector (an increase of 1.7%).

Payrolled employees
Early estimates for December 2022 indicate that there were 29.9 million payrolled employees (Figure 1), a rise of 2.3% compared with the same period of the previous year. This means a rise of 676,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees increased by 0.1% in December 2022, which is equivalent to 28,000 people.

Note, this monthly growth of 28,000 should be treated as provisional, because it is based on an early estimate of December 2022 employees. More information on revisions can be found in Section 11: Strengths and limitations.

When comparing the number of payrolled employees in November 2022 with the previous month, the number increased by 0.2%. This is revised down from the early estimate of a 0.4% increase reported in our previous bulletin, Earnings and employment from Pay As You Earn Real Time Information, UK: December 2022.

Annual growth in the number of employees remained broadly within a range of 1.0% to 1.5% from mid-2016 until 2019. Growth rates before mid-2016 were higher than 1.5% (Figure 2).

Starting around early 2019, employee growth began a slight downward trend. However, employee growth slowed more substantially past March 2020, coinciding with the coronavirus (COVID-19) pandemic, becoming negative in April 2020.

At the start of 2021, growth rates began to recover and remained high as the labour market continued to recover from the effects of the pandemic. From April 2022, the annual growth rate was falling. However, this fall would have been partially caused by the comparison against the increase in employee numbers from March 2021, and it levelled off as we no longer compared against this higher baseline.

Median monthly pay
Early estimates for December 2022 indicate that median monthly pay was £2,194, which is an increase of 7.7% compared with the same period of the previous year.

Following a general trend of increasing pay growth between mid-2015 and mid-2018, pay growth tended to fluctuate around 3.6%, until 2020 when it became negative. This coincided with the coronavirus (COVID-19) pandemic and related economic and policy responses. From June 2020, median pay growth has been positive and is now above pre-coronavirus pandemic (February 2020) levels.

The relatively high level of pay growth between June and December 2020 is partially explained by lower levels of people entering the labour market than usual during that period. This is explored in our August 2020 earnings and employment bulletin and September 2020 earnings and employment bulletin.

While the general trend of pay growth is dominated by those continually employed, the mean pay of people entering the labour market (referred to as inflows) tends to be around 40% lower than the mean pay for those continually employed. This means that inflows into payrolled employment tend to bring down average pay and average pay growth. As inflows were relatively low between June and December 2020, this reduced the downward pressure on pay growth, which in turn increased median pay growth.

The high level of pay growth in April 2021 is attributed to the relatively high median pay in April 2021, combined with the suppressed level of median pay in April 2020 at the start of the coronavirus pandemic.

Pay distribution
In the three months to November 2022, the 10th percentile of the monthly pay distribution was £708, the 90th percentile was £5,132 and the 99th percentile was £14,484 (Figure 5). This means that:

10% of payrolled employees earned equal to or less than £708 per month

90% of payrolled employees earned equal to or less than £5,132 per month

99% of payrolled employees earned equal to or less than £14,484 per month

London and Northern Ireland experienced higher growth than the UK average between January 2017 and early 2020, while the North East and Scotland experienced lower growth than the UK overall. Employee numbers within NUTS1, NUTS2, and NUTS3 regions are available in the accompanying datasets.

Over the course of the coronavirus pandemic, all regions' growth rates followed a similar pattern. Growth rapidly declined and became negative in April 2020, but from the middle of 2021 began to recover. As regions have caught up with their pre-coronavirus level, these high growth rates have started to fall back to rates seen historically before the pandemic.

Comparing December 2022 with the same period of the previous year for NUTS1 regions, changes in payrolled employees ranged from the highest being a 3.6% increase in London to the lowest being a 1.8% increase in the North West.

Examining NUTS3 regions, the Scottish Borders experienced an increase of 0.8% in payrolled employees in comparison with December 2021, and Tower Hamlets experienced an increase of 6.1% (Figure 7).

Read the full report from the ONS HERE