Average Earnings and Hours of Work
April 2007
November 2007
National Performance Indicator NI 166: Average earnings of employees in an area
Central Government has set 198 priority measures for local government. Median gross weekly pay for full-time employees by place of work is indicator number NI 166.
The workplace figure for full-time employees for the Lancashire County Council NUTS-3 area is included in Table 1 (£417.40).
Please note that this article gives more prominence to the average earnings results by place of residence, and for all employees rather than just full-time employees.
Summary
The 2007 results reveal that the gap between median weekly earnings for residents in the Lancashire County area and the national figures has narrowed in the year to April 2007. At £365.40, the Lancashire figure is now only 2.9% lower than the Great Britain average of £376.50.
The gap between male and female wage rates remains substantial. The median male weekly earnings figure for Lancashire residents of £441.90 is significantly higher than the female result of £280.30.
Introduction
The Annual Survey of Hours and Earnings (ASHE) provides information about the levels, distribution and make-up of earnings and hours worked for employees in all industries and occupations in the United Kingdom. The ASHE was introduced in 2004 to replace the New Earnings Survey to improve the coverage of employees.
All the Lancashire ASHE results have been put in the Data Download Centre, whilst the complete data sets - and comprehensive details of the methodology used to derive the figures - can be found on the Office for National Statistics website.
The Annual Survey of Hours and Earnings uses a 1% sample of employees in employment. The 2007 results are based on 142,000 returns, down from 175,000 in 2006. The impact of this change has been minimised with the largest sample reductions occurring in industries where earnings are least variable.
The results are presented by both place of work and by place of residence. This allows comparisons between average earnings generated within an area and those generated by employees who live in the area. This is of particular interest in Lancashire, where noticeably more residents commute to areas such as Manchester and Liverpool than outsiders coming into Lancashire for employment. In 2001, there was a net outflow of Lancashire residents to work centres outside the sub-region in excess of 21,000 and this number is very likely to have increased since that date.
The ASHE results unfortunately do not cover the self-employed, nor do they cover employees not paid during the reference period. For the ASHE results the median (middle value) is used as the headline statistic. The median is the value below which 50% of employees are allocated and is more reflective of the 'typical' wage or income. It is preferred over the mean for earnings data as it is influenced less by extreme values and because of the skewed distribution of earnings data.
The earnings information collected relates to gross pay before tax, national insurance and other deductions, and excludes payments in kind. Most of the published ASHE analyses relate to full-time employees on adult rates whose earnings for the survey pay period were not affected by absence or short-time working.
Average Weekly Earnings and Hours Worked
This monitor details the workplace and residence-based figures down to the district level. Because the residence-based results better reflect the earnings of employees living in Lancashire, they have been given more prominence in this article. At the North West and Great Britain levels the residence-based figures have also been used.
Median residence-based gross weekly earnings for all employees (both full and part-time) for Great Britain whose pay was not affected by absence stood at £376.50 in April 2007. Average gross weekly earnings by place of residence for all employees in Lancashire County (NUTS-3), which excludes Blackburn with Darwen and Blackpool Unitary Authorities, were £365.40 in 2007, £11 a week less than the GB figure.
This latest 2007 Lancashire figure of £365.40 was only 2.9 percentage points below the national average and represents the smallest differential between the county and national results for the past six years. In 2002 the gap was 6.4%, and in the following years it was 6.2%, 7.2%, 4.5% and then 8.3% before arriving at the most recent figure of 2.9%. The six-year picture reveals some mild volatility but the broad pattern is one of lower average earnings in the Lancashire County Council area; however the gap has not been excessive.
The differences between the workplace and residence-based figures reveal the effect of cross-border commuting on the results. The Lancashire weekly residence-based figure for all employees, at £365.40, is approximately £12 per week higher than the workplace figure of £353.10 per week. The proximity of Manchester and Liverpool means that many county residents are able to take advantage of higher value work opportunities in these large conurbations.
The percentage change figures for the year to April 2007 reveal residence-based earnings in Lancashire were estimated to have increased by 8.6%, whilst at the national level the figure rose by 3.2%. The previous year saw the residence-based figure in the county show a slight yearly reduction. Given the sample size, the county figure (and most certainly the district results) will be more volatile, and therefore yearly changes must be viewed with some caution. Such a large yearly increase at the county level is certainly likely to over-exaggerate the true rate of change. The annual average change result for Lancashire (Table 3) does reveal a smaller yearly increase. Methodological differences between the weekly and annual results mean that the yearly figures are perhaps somewhat more statistically robust and offer a slightly more accurate picture of recent trends.
Complementary Research
We present a number of other research monitors in the Earnings, Income and Benefits section that complement this monitor. Of particular note is the Average Gross Household Income monitor that considers combined figures for both earnings and other forms of income down to the ward level.
The Unemployment section contains information on the numbers of people in Lancashire entering and leaving the claimant count. Turnover rates in the county are higher than nationally, probably reflecting the lower earnings rates in the area and the structure of the local economy. For example, the tourism industry is well represented in Blackpool and the coastal areas of the county, which is a sector with high staff turnover rates and temporary employment levels. The same point can be made for the horticulture industry which is especially strong in West Lancashire. The county is also well represented in work areas such as call centres, mail order and catalogue sales, where high levels of staff turnover and temporary jobs are a factor.
Average Earnings by Gender
| Lancashire County (NUTS-3) | North West | Great Britain | ||||||
| Workplace-Based(1) | Residence-Based | Residence-Based | Residence-Based | |||||
| Weekly Pay (£) | % Change, 2006-07 | Weekly Pay (£) | % Change, 2006-07 | Weekly Pay (£) | % Change, 2006-07 | Weekly Pay (£) | % Change, 2006-07 | |
| Full-time males | 461.7 | 3.3 | 475.9 | 4.9 | 479.1 | 3.9 | 500.7 | 2.6 |
| Part-time males | 136.0 | 8.7 | 128.3 | 1.5 | 136.1 | 6.3 | 138.0 | 7.5 |
| All males | 434.3 | 4.8 | 441.9 | 5.0 | 442.2 | 2.5 | 468.5 | 2.5 |
| Full-time females | 344.9 | 4.0 | 368.8 | 6.7 | 369.7 | 3.0 | 394.8 | 3.0 |
| Part-time females | 140.5 | 2.2 | 141.2 | -0.4 | 143.3 | 3.5 | 146.3 | 4.2 |
| All females | 253.0 | 2.2 | 280.3 | 8.3 | 280.0 | 4.4 | 287.5 | 2.7 |
| All full-time employees | 417.4 | 3.7 | 429.4 | 4.5 | 432.7 | 3.1 | 459.0 | 3.0 |
| All part-time employees | 139.1 | 2.5 | 139.1 | -0.8 | 141.3 | 3.9 | 144.5 | 4.6 |
| All employees | 353.1 | 6.7 | 365.4 | 8.6 | 355.8 | 3.3 | 376.5 | 3.2 |
| Note Figures are for employees on adult rates of pay not affected by absence. | ||||||||
| (1) The workplace figures correspond with National Indicator NI 166. | ||||||||
| Source ONS - Annual Survey of Hours and Earnings | ||||||||
Table 1 highlights the fact that in Lancashire, the largest differential between workplace and residence-based average earnings is amongst female full-time employees. Full-time female workers appear to gain the most from commuting to better paid jobs outside the county.
There remains a sizeable variation between full-time male and full-time female earnings levels of well over £100 per week by both forms of measurement. The place of residence figures reveal that full-time female median wage rates are on average 22.5% less than their male counterparts. The yearly percentage changes do reveal higher increases for all female employees, but the differences are minor and have only very slightly narrowed the gender earnings gap over the past year.
Women's weekly earnings were lower than men's partly because at the GB level their median hours worked of 34.5 was 3.4 hours fewer than the male average. In Lancashire, the differential was slightly lower with a median figure for males (by place of residence) of 38.1 and for females of 35.0.
Average Earnings by District
Details of average earnings by workplace and by residence for all full-time employees across the twelve Lancashire County districts and the two unitary authorities of Blackburn with Darwen and Blackpool are shown in Figures 1 and 2, and in Table 2.
It is important to emphasise that volatility as a result of sampling errors greatly increases at the district level. Comparisons with previous district results (see the Data Download Centre) over recent years show some very marked variations, due to the fact that the sample sizes are subject to wide margins of error of in some cases up to 20% either way.
Figure 1 and Table 2 highlight Fylde District (£462.50) as the authority with the highest workplace-based average earnings figure in Lancashire. Along with South Ribble, Ribble Valley and, by a very small margin, West Lancashire, these were the four authorities in Lancashire that recorded figures above the national average. The Fylde result reflects the impact of locally large and high-value sectors such as aerospace, nuclear fuels, and financial and business services. Similar considerations apply to Ribble Valley, whilst South Ribble in particular is a strategically well-placed authority that has experienced strong employment growth over recent years. At the other extreme, Blackpool, Hyndburn, Rossendale and Wyre all recorded workplace-based weekly averages of under £300 per week.
For the residence-based figures at the district level, the highest median figure for gross weekly earnings was recorded this time in Ribble Valley (£423.80), followed by Fylde (£419.40). West Lancashire and South Ribble also managed to record averages of over £400 per week. In addition to these four authorities, Lancaster (£380.40) had an average figure that was in excess of the GB result of £376.50.
The fact that many employees of some of the firms based in Fylde district reside outside the authority means that the district records a much lower residence-based figure than workplace-based figure. Other authorities that have economies that generate higher workplace median weekly wage rates than for their residents include Blackburn with Darwen with a differential of around £29 a week, South Ribble where the difference was £18 per week, and Blackpool with a gap of approximately £17 per week.
In total, only five of the 14 Lancashire authorities recorded higher workplace than residence-based figures. The opposite was of course the case for the other nine authorities where commuter flows result in higher residence-based figures. In general terms therefore the broader Lancashire area records an overall benefit from its proximity to well-paid jobs in large neighbouring conurbations.
The proximity of Rossendale district to the Manchester area leads to a very significant differential of over £60 per week between the two district averages. Chorley is a popular commuter location and records a differential of approaching £55, whilst Wyre is a residential location for many commuters and had a residence-based figure that was around £37 per week in excess of the workplace-based result.
The relatively low average earnings potential for residents in areas such as Blackpool and Hyndburn has obvious consequences with regard to levels of disposable income, mortgage/house purchasing capacity, savings, investment and wealth generation, and quality of life for some of the local residents.
| Residence-Based | Workplace-Based(2) | |||||
| Thousands of Jobs in Survey Sample | Median Gross Weekly Earnings | Median Total Hours Worked | Median Gross Weekly Earnings | |||
| £ | As % of Lancashire County | As % of Great Britain | £ | |||
| Burnley(1) | 25 | 329.2 | 90.1 | 87.4 | 37.0 | 308.5 |
| Chorley(1) | 43 | 375.7 | 102.8 | 99.8 | 37.0 | 320.9 |
| Fylde(1) | 27 | 419.4 | 114.8 | 111.4 | 37.0 | 462.5 |
| Hyndburn(1) | 29 | 307.8 | 84.2 | 81.8 | 37.0 | 287.4 |
| Lancaster(1) | 44 | 380.4 | 104.1 | 101.0 | 37.0 | 356.1 |
| Pendle(1) | 25 | 350.1 | 95.8 | 93.0 | 37.5 | 352.8 |
| Preston(1) | 45 | 325.6 | 89.1 | 86.5 | 37.0 | 324.9 |
| Ribble Valley(1) | 24 | 423.8 | 116.0 | 112.6 | 37.5 | 391.9 |
| Rossendale(1) | 23 | 351.5 | 96.2 | 93.4 | 37.5 | 289.4 |
| South Ribble(1) | 39 | 390.8 | 107.0 | 103.8 | 37.0 | 408.8 |
| West Lancashire(1) | 37 | 409.6 | 112.1 | 108.8 | 37.5 | 376.6 |
| Wyre(1) | 29 | 331.2 | 90.6 | 88.0 | 37.0 | 294.0 |
| Lancashire County (NUTS-3) | 389 | 365.4 | 100.0 | 97.1 | 37.0 | 353.1 |
| Blackburn with Darwen(1) | 44 | 325.5 | 89.1 | 86.5 | 37.0 | 354.2 |
| Blackpool(1) | 44 | 269.6 | 73.8 | 71.6 | 37.0 | 286.7 |
| North West | 2,468 | 355.8 | 97.4 | 94.5 | 37.0 | 358.4 |
| Great Britain | 22,802 | 376.5 | 103.0 | 100.0 | 37.0 | 376.0 |
| Notes Figures are for employees on adult rates of pay not affected by absence. | ||||||
| (1) The results for the 12 districts and two unitary authorities are based on very small sample sizes and are subject to wide margins of error. At the county level and above, the uncertainty (for the residence-based figures) is 5% either way but at the sub-Lancashire level this increases to up to 10%. | ||||||
| (2) The workplace figures correspond with National Indicator NI 166. | ||||||
| Source ONS - Annual Survey of Hours and Earnings | ||||||
The Lowest Average Earnings by Place of Residence in Great Britain
In 2007, Blackpool unitary authority had the unfortunate distinction of recording the lowest average median gross weekly pay figure by place of residence for the whole of Great Britain. The second lowest figure (£272.20) was recorded for Berwick-upon-Tweed, whilst Penwith council, based in Penzance, Cornwall, was third lowest with £275.10.
Median Gross Annual Earnings
As well as providing data on average gross weekly earnings, the ASHE also provides information on average gross annual earnings (Table 3). The figures are available down to the district level. However when split by gender some of the data are suppressed due to the small sample size.
| Thousands of Jobs in Survey Sample | All Males | All Females | All Employees | |||||
| Median Gross Annual Earnings | Median Gross Annual Earnings | Median Gross Annual Earnings | % Change 2005-06 | |||||
| £ | As % of Great Britain | £ | As % of Great Britain | £ | As % of Great Britain | |||
| Burnley(2) | 23 | 21,821 | 87.1 | 11,992 | 79.8 | 16,813 | 83.9 | -12.9 |
| Chorley(2) | 36 | 22,381 | 89.3 | 15,080 | 100.3 | 20,401 | 101.8 | 13.6 |
| Fylde(2) | 22 | — | — | 13,004 | 86.5 | 21,591 | 107.8 | 9.4 |
| Hyndburn(2) | 23 | — | — | — | — | 15,930 | 79.5 | 2.6 |
| Lancaster(1) | 35 | — | — | — | — | 21,237 | 106.0 | 10.3 |
| Pendle(2) | 19 | 20,027 | 79.9 | — | — | 18,129 | 90.5 | 19.8 |
| Preston(2) | 41 | 20,581 | 82.1 | — | — | 17,094 | 85.3 | 4.0 |
| Ribble Valley(2) | 22 | 29,904 | 119.3 | 17,622 | 117.3 | 21,134 | 105.5 | 6.5 |
| Rossendale(2) | 19 | 25,164 | 100.4 | — | — | 18,630 | 93.0 | -0.2 |
| South Ribble(1) | 33 | 24,978 | 99.7 | 15,059 | 100.2 | 21,082 | 105.2 | 9.6 |
| West Lancashire(1) | 30 | 26,319 | 105.0 | 18,241 | 121.4 | 22,661 | 113.1 | 14.9 |
| Wyre(2) | 23 | — | — | 14,529 | 96.7 | 17,136 | 85.5 | -4.2 |
| Lancashire County (NUTS-3) | 326 | 23,229 | 92.7 | 14,611 | 97.2 | 19,004 | 94.8 | 4.4 |
| Lancashire (NUTS-3) by Place of Work | 308 | 23,170 | — | 13,711 | — | 18,812 | — | 5.4 |
| Blackburn with Darwen(2) | 35 | 20,612 | 82.2 | — | — | 17,973 | 89.7 | 6.4 |
| Blackpool(1) | 32 | 20,459 | 81.6 | — | — | — | -3.1 | |
| North West | 2,078 | 23,864 | 95.2 | 14,861 | 98.9 | 19,072 | 95.2 | 3.9 |
| Great Britain | 18,947 | 25,064 | 100.0 | 15,029 | 100.0 | 20,037 | 100 | 2.8 |
| Note The results for the 12 districts and two unitary authorities are based on very small sample sizes and are subject to wide margins of error. At the county level and above, the uncertainty is 5% either way but at the sub-Lancashire level this increases to up to 10% [note (1)] and up to 20% [note (2)]. These margins of error are for all employees - the figures split by gender are even more uncertain. Where figures are not available, it is because they are considered to be too unreliable. | ||||||||
| Source ONS - Annual Survey of Hours and Earnings | ||||||||
The median earnings figures highlight the middle value for each area and so are not influenced by the very large salaries earned by a relatively small number of high fliers at the top of their professions. The highest median values by place of residence in Great Britain at the local authority level were £32,474 in the City of Westminster and £32,317 in Hammersmith & Fulham. The two lowest median values were recorded in Forest Heath in Suffolk (£14,696) and Christchurch in Dorset (£14,706). The figure for Hyndburn (£15,930) was the sixteenth lowest in Great Britain (excluding 32 authorities including Blackpool that did not have published figures).
Median earnings for all employees by place of residence in GB for April 2007 stood at £20,037. Median male earnings were on average £25,064, compared with only £15,029 for females. For the Lancashire County (NUTS-3) area, the residence-based figure for all employees was £19,004, 5.2% less than the national average. The gender split reveals that for the county, female median earnings are just 2.8% less than the national average whilst for men the negative differential is 7.3%.
There are methodological differences between how the weekly and annual figures are derived, which result in the annual figures being on a pro rata basis higher than the weekly results.
For the annual results, the figures for all employees residing in the 12-district Lancashire County reveal a growth rate for the year to April 2007 of 4.4%, which compares favourably with the GB average of 2.8%.
At the district level, the volatility of the figures is highlighted by the substantial 19.8% increase for all employees in Pendle and the -12.9% reduction in Burnley. In general terms however the results for 14 local authorities broadly reflect what would be expected. West Lancashire manages to top the list with an average of £22,661, whilst Chorley, Fylde, Lancaster, Ribble Valley and South Ribble all managed to record figures in excess of £20,000. Chorley in particular appears to benefit somewhat from analysing the annual figures. Like South Ribble, it is an authority that takes full advantage of its geographic location and is a place that has recorded significant improvements in a range of economic indicators over recent years.
West Lancashire, on the other hand, is an area with many popular commuter towns and villages surrounded by a large amount of grade 1 agricultural land. It also includes the large town of Skelmersdale that does have problems of deprivation but which is in a good business location.
For further details, or if you have any ideas for improving the content of this article, please contact:
Bryan Moulding
Tel 01772 534172
Email Bryan.Moulding@lancashire.gov.uk