Pay inequality grows


Pay for top earners has risen more rapidly than for the rest of the workforce over the past decade, a new analysis from pay analysts Incomes Data Services has revealed.

As a result, the average earnings figure has been pulled upwards, leaving a growing number of full-time employees below the average. This trend has been particularly strong since Labour came into power in 1997.

By 2002, nearly two-thirds of UK workers were making less than the national weekly average of £465 a week.

The latest issue of IDS Report, published today, analyses the growing disparity of earnings in Britain. It shows that, in the past decade, earnings of the top 10 per cent of employees have climbed by nearly 54 per cent, while the lowest 10 per cent of full-time workers have seen their earnings rise by just 45.6 per cent.

The disparity is largely due to huge pay rises awarded to a small number of (almost exclusively male) City executives. Last month, IDS reported that pay for the top 5 per cent of male employees has grown at such a rate that it pulled the average for all men upwards and further away from the average for all women.

The National Minimum Wage introduction in 1999 has had “little impact on the growth in overall earnings inequality”, the report adds.

The same issue of IDS Report also includes the latest analysis of pay settlements. The results show that settlement levels have been fairly stable over the past 12 months, with the bulk of private sector reviews giving increases of between 2 and 3 per cent, while public sector pay deals have been worth between 3 and 4.5 per cent.

The first analysis of January 2003 pay reviews so far shows pay increases are mostly in the 2 to 3.5 per cent range, with fewer pay freezes than a year ago.