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Average Earnings and Hours of Work
April 2008

November 2008

National Performance Indicator NI 166: Average earnings of employees in an area

Central government has set (External) 198 priority measures for local government . Median gross weekly pay for full-time employees by place of work is indicator number NI 166. Details of results for the national indicators can be found on the (External) Floor Targets Interactive section of theCommunities and Local Government website .

It is one of the priority measures identified by Lancashire County Council as part of the Economic Development theme of the Lancashire Local Area Agreement .

The workplace figure for full-time employees for the Lancashire County Council (NUTS-3) area is included in Table 1 (£442.90). This compares with a GB total of £479.3.

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 2008 results reveal that the average median weekly earnings for residents (all employees) in the Lancashire County area was £375.50. This was about 4% lower than the national average of £391.0.

The gap between male and female wage rates remains substantial. The median male weekly earnings figure for Lancashire residents of £451.70 is significantly higher than the female result of £280.50. The large variations between the numbers of males and females that have part-time jobs in Lancashire is a major reason behind the much lower median earnings figure for females.

In general terms, Lancashire benefits from commuter flows with median weekly earnings being higher when measured by place of residence in comparison to place of work.

At the local authority level, Blackpool, Burnley and Wyre occupy the bottom three places for residence-based average weekly earnings for all employees.

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

The complete data sets, and comprehensive details of the methodology used to derive the figures, can be found on the (External) Office for National Statistics website .

The Annual Survey of Hours and Earnings is based on a sample of employee jobs taken from HM Revenue & Customs PAYE records. The survey for 2008, is based on 146,000 returns (142,000 in 2007). The results are presented by both place of work and by place of residence. This allows comparisons between average earnings generated within an area with 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 in to Lancashire for employment. At the time of the census 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 do not unfortunately 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 in this article 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 (average) 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.

Lancashire Profile contains 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 , which considers combined figures for both earnings and other forms of income down to the ward level.

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.

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 £391.0 in April 2008. Average gross weekly earnings by place of residence, for all employees in the Lancashire County Council area (NUTS-3), which excludes Blackburn with Darwen and Blackpool Unitary Authorities, were £375.50 in 2008, £15.50 week less than the GB figure or 3.9% percentage points below the national figure.

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 of £375.50 is £9.40 per week higher than the workplace figure of £366.10 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 2008 reveal residence-based earnings for all employees in the Lancashire County Council area were estimated to have increased by 4.4% whilst at the national level the figure rose by 3.4%. Given the sample size, the county figure and district results are volatile and therefore yearly changes must be viewed with some caution. The previous year had seen a large yearly increase at the county level and the 2008 result is again ahead of the national rate of change. In contrast, the annual average change result for Lancashire (Table 3) reveals an increase of 6.0% which is higher than the GB figure of 4.3%. Methodological differences between the weekly and annual results mean that the yearly figures are perhaps more statistically robust and offer a slightly more accurate picture of recent trends.

Complementary Research

The unemployment section of this website contains information on the numbers of people in Lancashire joining 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 coastal areas of the Lancashire NUTS-3 area, 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

Table 1 highlights the fact that in Lancashire, the largest differential between workplace and residence-based average earnings is amongst female full-time employees (£14.30). 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. The gap is £97.50 by place of residence and grows to £105.30 when measured by place of work.

The employment structure research monitor highlights in particular the large variations between the numbers of males and females that have part-time jobs in Lancashire. This will be a major reason behind the much lower median earnings figure for females.

Average Earnings by District

Details of average earnings by workplace (Figure 1) and by residence (Figure 2), 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 the two Figures, and also 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 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 dramatically highlight the fact that Fylde District (£544.7) has by far the highest workplace-based average earnings figure of any of the 14 local authorities in the broader Lancashire area. It was the 12th highest figure out of all local authorities in Great Britain. It was only behind nine London authorities, one in Surrey and Copeland Borough Council in the Lake District which contains the Sellafield site that will be a significant source of local high value jobs. Fylde is home to a major British Aerospace site and also a (External) nuclear fuel site at Springfields . Both locations are sources of high value jobs.

South Ribble was the other local authority that recorded a figure above the national average of £390.0. The district is strategically a well-placed authority and has experienced strong employment growth over recent years. At the other extreme, Blackpool and Rossendale both recorded workplace-based weekly averages of under £300 per week. The average for Blackpool of £287.60 was only ahead of 12 other authorities in the country. Authorities in Devon and Cornwall that are particularly reliant on tourism occupied a number of the lower positions.

Chart showing workplace-based median gross weekly pay for employees on adult rates of pay - see text for details Note The Lancashire result is an amalgamation of the 12 district authorities and excludes the two unitary authorities of Blackburn with Darwen and Blackpool. Source ONS - Annual Survey of Hours and Earnings

For the residence-based figures at the district level, the highest median figure for gross weekly earnings was again recorded in Fylde (£435.4) followed by West Lancashire (£412.2). Ribble Valley and South Ribble also managed to record averages above the GB figure of £391.0 per week. In addition, Chorley, Rossendale, Pendle and Lancaster had average figures that were in excess of the North West result of £371.4.

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 figures than workplace based figure. Blackburn with Darwen with a differential of around £32.70 a week is also an authority where the workplace figure is noticeably in excess of the residence base result.

Chart showing residence-based median gross weekly pay for employees on adult rates of pay - see text for details Note The Lancashire result is an amalgamation of the 12 district authorities and excludes the two unitary authorities of Blackburn with Darwen and Blackpool. Source ONS - Annual Survey of Hours and Earnings

Only three of the 14 Lancashire authorities recorded higher workplace than residence base figures. The opposite was of course the case for the other eleven 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 to the Manchester area leads to a very significant differential of £75 per week between the two district results. A very much lower workplace figure contrasts quite dramatically with a quite respectable residence-base result. Chorley is a popular commuter location and records a differential of approaching £31, whilst Lancaster records a similar differential with many commuters heading south to Preston and beyond.

The relatively low average earnings potential for residents in areas such as Blackpool and Wyre 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.

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 2008 results however showed a noticeable improvement in its ranking, and the authority has moved up to 15th lowest position. The area that was the second lowest in 2007, Berwick-upon-Tweed, occupies bottom place in 2008 with an average of £271.4.

Median Gross Annual Earnings

As well as providing data on average gross weekly earnings, the ASHE also provides information on average gross annual earnings. The figures are available down to the district level, however when split by gender much of the data are suppressed due to the small sample size. No average figures for all employees were available for 43 authorities in Great Britain including Blackpool.

The median earnings figures highlight the middle value for each area, therefore 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 GB at the local authority level were £35,670 in the City of Westminster and £34,018 in Richmond-upon-Thames. The two lowest median values were recorded in Berwick-upon Tweed (£14,441) and Restormel (Cornwall) (£15,778). The figure for Hyndburn (£16,730) was the sixteenth lowest in Great Britain and Wyre (£16,936) had the 19th lowest rate (excluding the authorities that did not have published figures).

Median earnings for all employees by place of residence in GB for April 2008 stood at £20,890. For the Lancashire County Council (NUTS-3) area, the residence-based figure for all employees was £20,136, only 3.7% less than the national average. The gender split reveals that for the county, female median earnings were £15,407, well below the male average of £24,885.

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 all employees residing in the 12-district Lancashire NUTS-3, the growth rate for the year to April 2008 of 6.0%, was ahead of the GB average of 4.3%.

At the district level, the figures are quite volatile and there are potential margins of error. Comparisons with the previous results for 2007 (see research monitor archive) reveal that for some districts (e.g. Burnley) a particularly sharp decline in one year is then mitigated by a large increase in the next.

In general terms however, the results for 14 local authorities broadly reflect what would be expected. Fylde manages to top the list with an average of £23,572. West Lancashire, Chorley, Lancaster, Rossendale, Ribble Valley and South Ribble all recorded figures of £20k or more. The very large 17.8% increase in Rossendale may prove to be a bit of a statistical anomaly and next year's figure may be much more subdued.

338
24,490
14,963
19,762
94.6
5.0
 
 
 
 
 
 
 
Blackburn with Darwen ⁽²⁾
36
20,777
14,268
17,996
86.1
0.1
Blackpool