What ASHE tells us about real wages in Northern Ireland

The findings of the 2014 Annual Survey of Hours and Earnings (ASHE) give an indication of wage levels and annual salaries across the UK and in Northern Ireland.

The ASHE samples 1% of people on HMRC’s ‘Pay As You Earn’ (PAYE) register at April of each year, covering both full-time and part-time employees. The results are then weighted in line with the characteristics of the general population, and the Northern Ireland data is available at the local level from NINIS.

One problem with ASHE, however, is that it excludes people who are self-employed (as PAYE does not apply to them). With an increasing proportion of workers moving into self-employment (between June 2013 and 2014 there was a 12% increase in self-employment, compared to a 2% rise in the numbers of employees[1]), this is a growing concern, provoking calls for the gap to be addressed.

Real Wages

The headline 2014 result is that UK wage growth was at its lowest annual level since the survey began in 1997 (just £1 a week more for a full-time employee). Northern Ireland was the only region to experience an actual drop in pay over the year, of the not insignificant amount of £6 a week (or 2.2%).

The published ASHE figures are in “nominal terms”, however. To compare wage levels over time, the relative prices of goods and services that workers’ wages will buy is a more useful benchmark. Chart 1 below shows median earnings in constant prices (i.e. earnings adjusted for inflation, known as “real wages”), as an index beginning in 1997. Between 2013 and 2014 the median real wages of Northern Ireland employees fell by 3.1%. This continues a pattern of decline that has been experienced since 2009, reversing the progress made in real wage levels in the period prior to this. Earnings are now around the same level as they were in 2000.

Chart 1 also shows that, since 1997, the median weekly wages of part-time workers increased by more than full-time wages. Consequently, the median hourly wage of part-time workers has increased from 62% to 70% of full-time wages.

Real wages index, Northern Ireland 1997-2014
Chart 1

Chart 2 below, comparing NI and UK real wages, shows that since 2009 weekly earnings in Northern Ireland have decreased by 10.1% in total, compared to a UK decline of 8.9%. NI’s median gross weekly earnings as a proportion of the UK level have decreased slightly: from 89.4% to 88% since 2009.

Median Gross Weekly Real Earnings (2005 constant prices)
Chart 2

Occupations: hourly pay

Changes in hourly pay varies between job types. Between 2006 and 2014 there has been a greater decrease in professionals’ real hourly pay than in any other occupation, as Chart 3 below shows. Over the span time shown, professional and technical occupation classes have lost around 17% of real hourly wages, skilled trades around 12% and process, plant and machine operatives 13%. Administrative workers have fared better, with real hourly pay increasing by around 1%. Managers and directors saw little change: their real earnings remained relatively steady over the period, falling significantly only in the last year. (Note that the 2011 revision of the Standard Occupational Classifications may affect these results, as movements of jobs between the major groups shown means that consistency over the timespan is not certain.)

Hourly pay (ex-overtime) by occupation in 2005 constant prices: Northern Ireland
Chart 3

Public and Private Sectors

Chart 4 shows the weekly earnings of Northern Ireland’s public and private sector employees as a percentage of median UK earnings. While Northern Ireland’s public sector earnings have been around the same level as the UK (even higher in the past), private sector wages are much lower at around 82% of the UK average. The gap between public and private pay in Northern Ireland has narrowed, however, from a difference of 23 percentage points in 1997 to 17 percentage points in 2014. 

NI Gross Weekly Earnings (UK=100): Public and Private Sectors
Chart 4

National Minimum Wage

Another striking result from the ONS was the number of jobs paid below the National Minimum Wage (NMW). Obviously, it is illegal to pay below minimum in terms of an hourly rate. However, the law allows overtime payments, bonuses and benefits-in-kind (e.g. employer-provided accommodation) to supplement hourly wages, therefore resulting in gross wages lawfully paid below the NMW. Despite this, various loopholes still exist to allow employers to get round the legal minimum, and the resulting numbers show up in survey data.

Results for 2014 show that 2.2% of employees in Northern Ireland (17,000 people) are paid below the NMW. The next highest was the North East of England, where about 1.2% of jobs were paid below the NMW, and the lowest in Scotland at just 0.5%. The historical data (including results from the Labour Force Survey) shows that in Northern Ireland the number of employees earning below minimum has been increasing over the last 15 years.

[1] DETI Quarterly Employment Survey Table 5.6 cf Table 5.2.

The opinions, views or comments in this article do not necessarily reflect any views or policies of NICVA.

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