The population of the UK has been moving southwards for more than 100 years. There have only been a few years in the past century when, on average, the population hasn’t moved south in search of bigger pay packets and improved living conditions.
This trend has created the long-held perception of a North-South divide in the UK, with most of the wealth centred in southern areas, particularly London and the surrounding counties.
But new research from management consultancy Hay Group suggests the North-South divide may be a thing of the past.
The Real Pay in the UK report examined detailed salary and cost-of-living information at all levels of employment, from un-skilled work to senior management, to show real pay levels for 13 regions across the UK. It reveals that employees in Scotland, Yorkshire and the North East are significantly better off than the rest of the country. And while high salaries in central London more than compensate for the high cost of living, salaries for employees in the South East, South West and East Anglia leave employees relatively out of pocket.
Ben Frost, reward consultant at Hay Group, said employers around the country could no longer rely on out-of-date notions such as the North-South divide when deciding pay levels.
“Local economic conditions are varied and complex, and employers must take them into account if they are to attract the best talent with salaries that provide genuine buying power in their region,” he said.
Topping the Real Pay table alongside central London is Scotland, where a cost of living 5.5% below national levels makes salaries worth 4% more than the national average in real terms. Graduate salaries north of the border are 2.5% above the national average, with senior management pay 12% above the average.
Not so grim up north
Salaries for Yorkshire’s workforce are 1% above the national average, a percentage that widens with progress up the career ladder. Employees at junior management level and above take home on average 9% more real pay than the national average.
The North East, meanwhile, experiences a 5.8% lower cost of living, while pay at most levels is significantly higher than the national average, making the region the third most affluent in the UK.
“Contrary to stereotypes, good salaries in Scotland and in the North, combined with more reasonable costs of living, are affording northern employees the best standards of living in the country,” said Frost.
“Ambitious northern firms should have no problem attracting talent from the cash-strapped South. Employers in the North are offering their workforces a better standard of living, and they should be shouting it from the rooftops.”
The stereotype of the affluent South East was also banished by the report. Here, the elevated cost of living – 5.3% above the national average – is not compensated for by enhanced salaries. Employees across the region are 6% worse off than the national average in real terms – and paid 10% less than the average inner London employee.
Suffering down south
The story is similar in the South West, where pay packets across the board are lighter than the national average, despite living costs being 1.3% higher. Like their south-eastern colleagues, employees in the South West take home 6% less than the national average in real terms. East Anglia is the second poorest paying region after Northern Ireland, with employees earning 8% below national rates on average – graduates there earn 10% below the national average and middle managers earn 6% below the national average.
“The so-called affluent South faces a high cost of living without commensurate high wages,” said Frost. “The South is now actually suffering from depressed wages. Companies in the region must address this issue if the UK is not to see a brain drain to the more affluent North.”
The Hay Group research backs up the findings of a recent report from Barclays, which also analysed salaries and living costs to assess which areas enjoyed the highest living standards.
Areas in London came top, but nearly half the best 50 locations were in the north of the country, including parts of Cheshire, Sheffield and Leeds.
Barclays said the study “blew away” the idea that you have to live in London or the South East for high living standards.
Real Pay: best places to work in the UK
1st (joint): Central London, Scotland
3rd: North East
4th (joint): Outer London, Wales
5th (joint): North West, East Midlands
6th: West Midlands
7th (joint): South East, South West
8th: East Anglia
9th: Northern Ireland
Source: Hay Group