ONS COVID-19 Briefing: Earnings and Employment

Experimental monthly estimates of payrolled employees and their pay from HM Revenue and Customs’ (HMRC’s) Pay As You Earn (PAYE) Real Time Information (RTI) data. This is a joint release between HMRC and the Office for National Statistics (ONS).

Note: This release covers people paid through the Pay As You Earn system where their pay is reported through the Real Time Information system. As employees who are “furloughed” as part of the Job Retention Scheme program should still have their payments reported through this system, they should feature in this data and contribute toward the employment and pay statistics for the relevant periods

Key Points

  • The number of payrolled employees in the UK in December 2020 fell by 2.7% compared with the same period of the previous year.
  • Early estimates for January 2021 indicate that the number of payrolled employees fell by 2.5% compared with January 2020, which is a fall of 730,000 employees.
  • In January 2021, 726,000 fewer people were in payrolled employment when compared with February 2020.
  • In January 2021, 83,000 more people were in payrolled employment when compared with December 2020.
  • Median monthly pay increased by 5.0% in December 2020 compared with the same period of the previous year.
  • Early estimates for January 2021 indicate that median monthly pay increased by 4.0% compared with the same period of the previous year.

Context

Payrolled employees

In December 2020, 28.2 million people were payrolled employees. This represents a 2.7% fall in payrolled employees when compared with the same period of the previous year. When comparing the number of payrolled employees in December 2020 with the previous month, the number increased by 0.3%.

Early estimates for January 2021 indicate that there were 28.3 million payrolled employees, a fall of 2.5% compared with the same period of the previous year and a decline of 730,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees increased by 0.3% in January 2021 – equivalent to 83,000 people.

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 prior to mid-2016 were higher than 1.5%. Starting around early 2019, employee growth began a slight downward trend. However, employee growth slowed more substantially past March 2020 (becoming negative in April 2020), coinciding with the COVID-19 pandemic.

Median monthly pay

Median monthly pay for payrolled employees in December 2020 was £1,931. This represents a 5.0% increase compared with the same period of the previous year. This is a small revision to the early estimate of a 4.9% increase reported in the previous bulletin.

Early estimates for January 2021 indicate that median monthly pay decreased to £1,923, an increase of 4.0% 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%. Pay growth for April and May 2020 became negative, coinciding with the COVID-19 pandemic as well as related economic and policy responses. More recently, median pay growth has increased, and is now above pre-coronavirus levels.

Pay distribution

In the three months to December 2020, the 10th percentile of the monthly pay distribution was £667, the 90th percentile was £4,592 and the 99th percentile was £13,159.

This means that 10% of payrolled employees earned equal to or less than £667 per month, 90% earned equal to or less than £4,592, and 99% earned equal to or less than £13,159.

Regional Data

Numbers of payrolled employees in the UK for the regions range from 745,000 in Northern Ireland to 3,984,000 in the South East in January 2021.

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.

Since February 2020, all regions’ growth rates followed a similar pattern: rapidly declining and becoming negative in April and continuing a slower downward trend since. However, the magnitude of changes varies. Comparing January 2021 with the same period of the previous year for NUTS1 regions, decreases in payrolled employees ranged from 0.8% in Northern Ireland to 5.2% in London.

Of the 726,000 decrease in payrolled employees since February 2020, 208,000 can be attributed to employees living in London, 114,000 in the South East, while only 7,000 can be attributed to employees living in Northern Ireland.

Industry Data

All sectors highlighted experienced a decrease in employee growth around April 2020, with the smallest decrease being in health and social work.

Some sectors (such as administrative and support services) have partially recovered since April 2020 but with employee levels still below the levels in the same month in the previous year. Only public administration and defence, and health and social work now have a positive growth rate.

Sectors such as finance and insurance, and education have had steep declines in employee growth around April 2020, with numbers slowly recovering. This results in small net changes in payrolled employees in the past 12 months for these sectors.

Some sectors have seen increasingly negative growth since April 2020, notably the arts and entertainment, and accommodation and food services sectors.

When compared with the same period of the previous year, percentage changes in payrolled employees range from negative 16.7% in accommodation and food services to positive 3.0% in health and social work. The arts and entertainment sector has experienced a fall in employees of 16.4%.

Of the 726,000 decrease in payrolled employees since February 2020, 345,000 can be attributed to employees working in the accommodation and food services sector, 149,000 in the wholesale and retail sector, while only 2,000 can be attributed to employees working in the education sector. This decrease is net of an increase of 36,000 employees working in public administration, and 104,000 employees in health and social work.

Age Data

Of the 28.3 million payrolled employees in the UK in January 2021, 95.5% are aged 18 to 64 years.

Of the 726,000 fall in UK employees between February 2020 and January 2021, 425,000 (58.5%) were under 25 years, 172,000 (23.7%) were aged 25 to 34 years, and 120,000 (16.5%) were aged 35 to 49 years. Only 11,000 (1.6%) were aged 65 years and over. This decrease is net of an increase of 3,000 aged 50 to 64 years.

The number of payrolled employees aged 50 years and over has increased at faster rates than the UK as a whole since 2017. Since 2019, this is particularly true for those aged 65 years and over, which saw employee growth peak at 10.7% in January 2020.

Since February 2020, annual employee growth has fallen to negative 33.2% for those aged under 18 years and negative 8.5% for those aged 18 to 24 years. These two groups have had the largest falls in employees in relative terms since the onset of the COVID-19 pandemic. Employee growth for those aged 65 years and over also fell sharply during April and May 2020 but recovered somewhat. Those aged 50 to 64 years saw a small rise in employee growth of 0.2% during this period.