NIESR Wage Tracker – August 2020

Pay Growth Turns Negative

Main points

• According to new ONS statistics published this morning, average weekly earnings, excluding bonuses, grew at an annual rate of -0.2 per cent in the three months to June, a fall of 0.8 per cent in real terms.  When bonuses are included, total pay fell at an annual rate of 1.2 per cent in the three months to June.
• More up to data information from HMRC’s real time information indicates that median pay rose by £34 per month in July and was now £75 higher than the trough in April. Employment fell by 740 thousand between February and July.
• There continues to be a disparity between pay growth in the public and private sectors. Regular annual pay growth fell by 1.2 per cent in the private sector and rose by 4.1 per cent in the public sector in the three months to June. The difference partly reflects greater use of furloughing in the private sector.
• Average earnings are expected to recover slightly in the short term as employees return from furlough, with average earnings excluding bonuses forecast to grow at an annual rate of 0.2 per cent in the three months to September.

“Average pay in the private sector levelled off in May and June after falling sharply in March and April. It will pick up in the short term as workers return from furlough.  But pay will weaken again in the second half of the year when unemployment is set to rise sharply”.
Garry Young, Deputy Director, NIESR