Blog

Category: Labour market

How does the minimum wage compare to top pay?

Alex Hurrell

Earlier this week the government announced that the minimum wage will rise to £6.31 from October this year. This marks a 1.9 per cent increase on the current rate of £6.19 and means the fourth straight annual fall in the real value of the minimum wage after inflation. The new rate was announced by Vince Cable at a Resolution Foundation event, held with the High Pay Centre and the Institute of Directors, to bring together debates about high pay and low pay. So how exactly does the minimum wage compare to the hourly wages received by those higher up the earnings distribution?

Figure 1 below shows the gross hourly wage at different points in the hourly earnings distribution: the National Minimum Wage from October 2012 and the new rate from October 2013, and at the 50th (the median), 70th, 90th and 99th percentiles. The earnings distribution considered here relates to the gross hourly wage received by full-time employees as recorded in the Annual Survey of Hours and Earnings (ASHE). This measure excludes overtime but includes any bonus payments or incentive pay received in the reference pay period.

Alex Hurrell

Trends in real wages under the new inflation measures

Last month’s ONS Consumer Price Inflation release for February 2013 included for the first time two new inflation index series, the RPIJ (1997-2012) and the CPIH (2005-2012). These new measures have been introduced in response to concerns with the current RPI and CPI measures respectively.

RPIJ is a modified version of the RPI, based on a slightly different mathematical calculation. It has been developed in response to a recent review of RPI by the National Statistician that concluded that RPI did not meet international standards because of the formula it uses (known as the ‘Carli’) to calculate prices for certain items in the RPI consumption basket. The new RPIJ measure is identical to the RPI in terms of the items it covers but addresses these concerns by using an alternative calculation method where necessary (known as the geometric ‘Jevons’ formula).

James Plunkett

This post originally appeared on the Huffington Post

For anyone hoping to sift a nugget of gold from recent economic data, employment stats have been the place to look. In the past year, the number of people working in the UK has risen faster than at any time since 1989, a remarkable performance from an economy with close to zero growth. Not only have these figures befuddled economists, prompting much debate of a productivity puzzle, but they've also encouraged a sanguine view of the jobs recovery. As the prime minister and leading commentators have been fond of pointing out - and rightly so - employment is now back to pre-crisis levels, making this one of the few economic indicators not keeping the Chancellor up at night.

Yet step back from a narrow focus on the number of people in work and the challenge we face on employment is daunting.

Matthew Whittaker

Despite the sluggish economic recovery, employment figures continue to surprise on the upside. With the public sector rapidly being cut back, all of this employment growth is of course coming from the private sector. But what does the picture look like across the different parts of the UK?

The green bars in the chart below show the proportional change in public sector employment in each Government Office Region in the period from Q4 2008 to Q3 2012. Unsurprisingly, it shows falling employment across the country, with Scotland, the North East, South West and North West being particularly hard hit. In direct contrast, the pink bars show that private sector employment has increased over the same period in all regions other than the South East.

Giselle Cory

We aren’t saving enough for retirement. This was one of the findings presented in Resolution Foundation’s recent audit of low to middle income households, Squeezed Britain, which showed that a massive 69 per cent of low to middle income households do not have a pension. Across all income groups the proportion failing to save for a pension has fallen over the last decade. This means that working in later life is now more important than ever.

Today, new analysis tells us how we’re doing when it comes to the employment of older workers. It shows that retirement ages - distinct from state pension age (SPA) - are rising. For both men and women, the average age at labour market exit increased by around a year between 2004 and 2010. What remains unclear is whether this is out of choice or necessity.

Giselle Cory

This post originally appeared on the Huffington Post

Today’s ONS release confirms the scale of the rise in underemployment. More than one in ten workers are now underemployed, working fewer hours than they would like to – a million more than in 2008. Recently, this increase has run hand in hand with a flat-lining of overall unemployment, as the chart below shows. In this downturn, more than others before it, pressure on employers is feeding through more into reduced hours than reduced overall numbers of staff.

Alex Hurrell

The ONS 2012 Annual Survey of Hours and Earnings release that came out this morning highlights that median real wages have fallen between 2010-11 and 2011-12. Median gross annual earnings for full-time employees were £26,500 for the tax year ending 5 April 2012, an increase of 1.4 percent from the previous year. But over the same period prices rose 4.8 percent according to the ONS’s Retail Price Index (RPI) measure. That implies that the earnings of a typical employee have actually fallen 3.2 percent in real terms. In fact, after accounting for inflation the median wage for full-time employees is now lower than it was in 1999-2000 (£26,900).

Giselle Cory

A glance at the labour market statistics will tell you that there’s a lot of involuntary underemployment. The number of people in this position –working few hours or in lower-skilled jobs for lack of finding something more suitable – is worryingly high and has been for some time. At the start of 2008, 1 million people were working in part-time or temporary jobs because they couldn’t find full-time or permanent work. This figure now stands at over 2 million. Thankfully this growth has now slowed. However many people remain trapped in underemployment.

There has been a question about where this underemployment has come from in the labour market. Over the last few years, we have seen a rise in part-time and temporary jobs. But as the chart below shows, this growth has occurred across the labour market.

Matthew Whittaker

A rare good news story from the ONS, with the latest labour market statistics bucking the trend for gloomy economic data. In June to August, unemployment fell to 2.53 million and the total number of people in employment (29.59 million) reached a new high. Yet, while the number of people out of work was down by 50,000, the number of Jobseekers Allowance (JSA) claimants fell by just 12,000 . What accounts for this startling difference?