Pay bounces back strongly as economy recovers

The labour shortage appears to be proving beneficial to many workers as pay increased significantly in 2021, according to figures from the Office for National Statistics (ONS).

Increases this year were most marked for the groups worst affected in 2020, such as younger people, men and those in lowest-paid jobs, but this also produced a widening of the gender pay gap.

The median weekly pay for full-time employees across the UK was £611 per week, which was a 4.3 per cent increase on the same period in the previous year.

Across all jobs, median weekly earnings in April 2021 increased by 5.3 per cent from a year earlier and when adjusted for inflation, they increased 3.6 per cent in real terms over the year.
It was a roller coaster ride for younger workers, who took the biggest hit in the early part of the pandemic and then bounced back strongly.

Figures released this month, show employees aged 16 and 17 saw earnings drop by 11.4 per cent in 2019-20, before bouncing back strongly by 12.5 per cent the following year.
The ONS data shows the impact of the pandemic significantly benefited men’s pay compared with women’s earnings, largely because of the furlough scheme, with the gap of seven per cent in April 2020 widening to 7.9 per cent in April this year.

Some of the most significant increases were in construction and manufacturing.

Construction workers saw weekly earnings rocket by 16.8 per cent in 2021 compared with a drop of 10.4 per cent a year earlier, while manufacturing employees benefited from an 8.3 per cent increase after falling by 3.1 per cent previously.

The data also showed the average number of paid hours increased by 1.5 per cent between 2020 and 2021 after falling 1.4 per cent between 2019 and 2020.
Employees who lost hours in 2020 are the biggest drivers of the increase in 2021, such as those in the accommodation and food industry, those aged 16 to 17 years, and those in elementary occupations.

There were also significant regional differences, with gross weekly earnings up by 8.8 per cent in Northern Ireland, compared with a 1.1 per cent rise in London, in 2021.
A spokesperson at the ONS, said: “After virtually flatlining last year at the start of the pandemic, earnings are returning to something like their long-term trend over the last few years.”

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