Angela Rayner wrong on wage growth

“Boris Johnson said that wages are rising. That is a lie, real wages are falling. The average worker is over £1,000 worse off today than they were in 2010 and the government’s own figures show it.”

Following Boris Johnson’s interview on the Andrew Marr Show on 3 October, Labour’s deputy leader Angela Rayner claimed the Prime Minister lied to say wages are rising. However, as we’ve already written the Prime Minister was fair to say wages are rising as they have gone up in real terms over the last year, even when the effects of the pandemic have been factored in.

Ms Rayner also claimed real wages are falling, referring to data showing wages are largely flat over the past few months.

She also said the average worker is more than £1,000 worse off today than in 2010. Labour told us this was looking at data referring to full-time workers across the UK. This data only goes up to 2020. Other data that includes 2021 and measures wages slightly differently shows that wages have risen by around £1,500 since 2010 in real terms, not fallen.

Are wages rising?

In its latest wage statistics release for employees in Great Britain, the Office for National Statistics (ONS) says: “In real terms (adjusted for inflation), total and regular pay are now growing at a faster rate than inflation, at 6.0% for total pay and 4.5% for regular pay,” referring to annual wage growth.

The ONS says interpreting wage data at the moment is difficult due to the volatility caused by the pandemic. But if factors related to the pandemic were stripped out, it estimates average regular earnings (excluding bonuses) have grown between 3.6% and 5.1% over the past year in cash terms. 

This is higher than the rate of inflation meaning that, whichever way you look at it, wages have grown in real terms over the past year.

You could also look at wage change over the past few months. This shows that wages are largely stable in real terms. 

In July, average total pay (including bonuses) in 2015 prices was £521 per week. This is basically the same as it has been for the past four months, and is a return to levels seen just before the 2008 financial crisis.

Average regular pay (excluding bonuses) has fallen slightly from £491 in April 2021 to £488 in July 2021. However looking back over the last nine months suggests regular pay is largely stable in real terms. 

Where do Labour’s figures come from?

Ms Rayner also claimed the average worker is over £1,000 worse off “today” than they were in 2010. 

Labour calculated the figure by looking at the change in weekly wages between 2010 and 2020. 

But we are not in 2020 anymore. And 2020 saw wages far below their usual level due to the pandemic, which have since recovered. 

Labour’s analysis used data covering workers across the UK from the Annual Survey of Hours and Earnings (ASHE). The party told us it averaged the median full-time earnings in each UK constituency. It added that it used these figures as they went some way towards reflecting changes in the composition of the workforce, by just focusing on full-time workers, rather than also including part-time workers.

This particular data isn’t available yet for 2021. But the ONS also produces more up to date data on wages covering the period to July 2021 (though this measures the mean average wages across all workers in Great Britain, rather than the median across full-time workers in the UK).

This data shows that, across 2010, total pay in real terms averaged £549 per week once adjusted for 2021 prices using the CPIH measure of inflation (which includes housing costs for owner occupiers and council tax). It is now £578 per week, meaning the average worker is £1,477 (in 2021 prices) better off per year now than they were in 2010.

In Labour’s analysis of the ASHE figures it calculated a real terms change using the Consumer Price Index (CPI) measure of inflation rather than the CPIH measure preferred by the ONS . 

But if you adjust wages using CPI you get a similar result, with total pay in July 2021 being £1,050 per year higher than the 2010 average in real terms.