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People who started employment in the 1990s were 40% better paid than those in the 1970s

Latest ONS analysis looks at how wages have changed over time

The latest ONS analysis looks at how wages have changed over time. Inflation-adjusted earnings data is used to see how the pay of people who were 21 in 1995 has fared over the period to 2013 (when they were 39). This is compared with people who turned 21 in 1985 and in 1975.

People who started employment in the 1990s were 40% better paid than those in the 1970s

People who started their career in the 1990s were paid on average 40% more in real terms in their first 18 years than those who started in the 1970s were at the same stage of their career. A similar comparison of those aged 21-49 shows that those who started work in 1985 earned 18% more than their 1975 counterparts.

The difference in earnings between the 1975 and later cohorts means that those who started work in 1975 had to work 3-4 years longer than those who started in 1985 in order to accumulate the same amount of earnings. They had to work 5-6 years longer than those who started in 1995 to accumulate the same amount of earnings.

Figure 1: Median real hourly earnings progression for employee cohorts aged 21 in 1975, 1985 and 1995, 1975-2013, UK

Figure 1: Median real hourly earnings progression for employee cohorts aged 21 in 1975, 1985 and 1995, 1975-2013, UK
Source: Annual Survey of Hours and Earnings (ASHE) - Office for National Statistics

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Average wages for those who started work in 1995 peaked at £14.12 per hour in 2009

Since 2009 all three cohorts have seen a fall in their real earnings, with inflation as measured by the Consumer Prices Index being above wage growth. Average wages for those who started work in 1995 fell by 10% to £12.72 per hour from a peak of £14.12 per hour in 2009.

For those who started work in 1975, wages fell by 12% to £11.03 per hour in 2013, from a peak of £12.54 per hour in 2009. Some of the decline for the 1975 cohort may be explained by people in their late fifties beginning to consider retirement, with the highest earners often retiring early. This would bring down average pay before any consideration is taken of the wider economic conditions.

Pay for men and women was similar up to the age of about 30 in 2013

In 1975, there was a marked difference between men and women in pay levels across the age range, except for the very youngest group, with the widest gap being for those aged 38 in that year (men of that age being paid on average 61% more than the women). In 2013, pay for the sexes was similar up to the age of about 30, with the divergence peaking at 45% for age 49. 

Top 1% paid employees earned 11 times more than bottom 1% in 2013

Wage inequality across the UK, as measured by the ratio of the top 1% of earners to the bottom 1% of earners has fallen since the introduction of the National Minimum Wage. In 2013 the highest paid employees earned 11 times more than the lowest paid, down from 13 times in 1998.

Wage inequality has also fallen across all regions of England and the devolved countries of the UK. In 2013 inequality was highest in London, with a ratio of 15, and lowest in Wales (a ratio of eight). The lowest level of inequality in Wales is explained by the fact that compared to other parts of the UK it has the lowest wages among their highest earners.

The National Minimum Wage has caused clear wage growth at the bottom of the earnings distribution for both full-time and part-time employees. Between 1975 and the introduction of the NMW in 1998, real earnings growth for the bottom 1% of full-timers was 63%, while the top 1% of earners saw growth of 138%, more than twice as much. However between 1998 and 2013, the bottom 1% of earners saw growth of 49%, 2.3 times more than for the top 1%. 

Where can I find out more about wage statistics?

This story was created by the Labour Market team at ONS. If you would like to find out more about wages, you can read the release. If you have any comments or suggestions, we would like to hear them. Please email us at: idp@ons.gsi.gov.uk

Categories: Labour Market, People in Work, Earnings, Economy
Content from the Office for National Statistics.
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