Average earnings surge as furloughed employees return to work, official figures show

Sectors hardest hit by the pandemic were among those to see the largest increase in wages

Average earnings surged last year, official figures have shown, with the increase largely driven by a rebound in the income of those most affected by the pandemic.

The latest data from the Office for National Statistics (ONS) found the median weekly earnings for full time employees increased by 4.3 per cent to £611 in April 2021, compared to the previous year, which was £586. This was the highest year-on-year growth since 2008, the ONS said.

Younger employees, men and those in the lowest paid occupations, which the ONS noted were all particularly affected by the pandemic, were among the groups that had the most notable increases.

While nearly all occupations saw an increase in full-time earnings, lower paid occupations including manufacturing, construction and accommodation and food services saw the largest increases.

Workers in the manufacturing sector, whose average earnings fell by 3.1 per cent between 2019 and 2020, saw their earnings increase 8.3 per cent between 2020 and 2021. Similarly, construction workers saw a 16.8 per cent rise between 2020 and 2021, following a decrease of 11.4 per cent the previous year.

Young workers, whose earnings dropped substantially between 2019 and 2020, also saw a rebound. Those aged 16 to 17 years saw average earnings increase by 15.9 per cent between 2020 and 2021, while 18 to 21-year-olds saw earnings rise by 10 per cent over the same period.

Join us for the CIPD's Annual Conference & Exhibition in Manchester on 3-4 November 2021. In-person features include Big Questions Live, the People Library and Legal Drop-in Clinic, as well as the opportunity to meet 85+ exhibitors and access our Insights stages. Book your ticket now

Across all jobs, part- and full-time, median weekly earnings increased by 5.3 per cent, falling to 3.6 per cent when adjusted for inflation.

However, the ONS said that because of the effects that the pandemic has had on wages and hours worked, wage comparisons with 2020 needed to be treated with caution.

In particular it noted that because thousands of people had their hours reduced or were furloughed on 80 per cent pay, many people saw their earnings fall last year, pushing down average earnings.

This means that this year’s higher growth rates can, in part, be explained by people’s hours returning closer to normal.

The figures also found a 1.5 per cent increase in the average number of hours worked in 2021, following a 1.4 per cent drop in the previous year, with workers who lost hours in 2020 the biggest drivers of the increase this year.