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Average Earnings

Department for Business, Innovation and Skills written question – answered on 22nd December 2015.

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Photo of Phil Boswell Phil Boswell Scottish National Party, Coatbridge, Chryston and Bellshill

To ask the Secretary of State for Business, Innovation and Skills, what the implications are for his Department's policy of the analysis undertaken by the Resolution Foundation set out in its report, The Pinch, published on 10 December 2015, of (a) the effects of the financial events of the last 10 years on those aged 16 to 44 relative to those aged 55 to 64 and (b) the changes in that period in levels of real median weekly earnings across different cohorts of the population.

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

The financial crisis triggered the worst recession in living memory. However, GDP surpassed its pre-recession level in Q2 2013 and the UK’s economic recovery is now well established. Since 2010, on average, the UK has been the joint fastest growing economy in the G7 and the labour market has continued to make strong progress.

According to data from the Office for National Statistics (ONS), excluding full-time students under the age of 25, the employment rate of people aged 16-49 fell from 76.9% in the three months to May 2008 to a post-recession low of 74.0% in the three months to March 2010. Since mid-2011, the employment rate for this group has increased over time and the latest data shows that it reached a record high of 77.7% in the three months to October 2015.

While the recession had less of an impact on the employment rate of people aged 50-64, their current employment has also reached a record high for this group, of 70.0%.

The analysis in Resolution Foundation’s report you mention looked at real median weekly earnings of various cohorts over time. While not strictly cohort analysis, more recent cross-sectional data from the ONS’s Annual Survey of Hours and Earnings (ASHE) shows that the increase in nominal median gross weekly pay between April 2014 and April 2015 varied across age groups as follows[1]:

  • 16-17 year olds: 8.2%[2]
  • 18-21 year olds: 4.0%
  • 22-29 year olds: 3.2%
  • 30-39 year olds: 1.1%
  • 40-49 year olds: 2.6%
  • 50-59 year olds: 2.5%
  • 60+ year olds: 1.9%

CPI inflation over the same period was -0.1% in the year to April 2015.

Pay, and ultimately living standards are strongly linked to productivity. That is why the Government is working hard to boost productivity, and therefore wages, with the ambitious measures outlined in our Productivity Plan. Our higher pay, lower tax, lower welfare society is the route to raising living standards for everyone in the UK.

[1] Employees on adult rates of pay whose pay for the survey period was not affected by absence

[2] Figures for 16-17 year olds include employees not on adult rates of pay

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