Earnings gap widens since 1980s

The top 1 per cent of earners enjoyed a real-terms increase of 117 per cent over the 25 years between 1986 and 2011, according to a new official analysis – compared with the average of 62 per cent, and with just 47 per cent for those in the lowest decile group.

Key points

  • In April 2011 the average full-time employee in the UK earned around £12.62 an hour excluding overtime, a cash increase of 226 per cent since 1986 when the average wage was £3.87 an hour. After adjusting for price increases over that time, full-time employees were on average 62 per cent better off in 2011 than in 1986.
  • Earnings increases were not evenly spread across the scale. Generally the higher earners did better, with the top 1 per cent having the biggest increase (117 per cent), the top 10 per cent an increase of 81 per cent, and the bottom 10 per cent an increase of 47 per cent. However, those at the very bottom broke the pattern, with the lowest 1 per cent having a 70 per cent increase.
  • Since 1998 – in other words, since the introduction of the national minimum wage – those at the very bottom end of the earnings distribution have done best of all. The bottom 1 per cent of the distribution have had a real-terms increase of 51 per cent, compared with a 30 per cent for the top 1 per cent.
  • Since the global economic downturn started in 2008, every group has experienced drops in real earnings. By contrast, in a four-year period covering the recession of the early 1990s, real wage growth was positive across the scale.
  • London has the greatest wage inequality, with the top 1 per cent paid 16.2 times more than the lowest 1 per cent. The least inequality was in Wales, where the highest earners had wages seven times higher than the lowest. 36 per cent of the top 10 per cent of earners in the UK work in London – thanks to the influence of high-paid jobs in the City.

Source: Earnings in the UK over the Past 25 Years, 2012, Office for National Statistics
Links: Report | ONS press release | TUC press release | Guardian report | New Statesman report

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