Top earners’ pay in 2022 has soared by around 10%, while pay increases for those in the lowest-paying roles are lagging at 1%.
Analysis of UK earnings data by the Centre for Economics and Business Research (Cebr) found that those in the top 1% of earners saw a 9.1% change in their year-on-year average pay in May 2022, while those in the bottom tenth of earners saw annual pay growth of just 1.3%.
Those in the 99th percentile saw average annual pay growth of 11% in March 2022, and 10.2% in April 2022. For those in the 10th percentile, these figures were 0.9% and 1.2% respectively.
However, while it may seem that pay among the higest earners took off in the first half of the year, the think tank said the value of pay increases for those in the top 1% lagged behind lower earners’ settlements in the preceding three years.
With the consumer prices index (CPI) measure of inflation ranging from 5.5% to 9.4% in the period analysed by Cebr, it noted that pay rises at the top end of the scale would have been wiped out, with top earners’ real pay slipping close to zero.
Last week the Bank of England changed its forecast for CPII inflation, predicting that it woud peak at 13.3% towards the end of this year and would remain high throughout 2023.
Pay in 2022
The National Institute of Economic and Social Research has also forecast that the retail prices index, which many trade unions use in pay bargaining, would rise to 17.7%.
Cebr said that many of the UK’s highest earners are concentrated in the City of London, usually in the finance, professional and technical industries.
Mean pay in these industries has seen especially strong growth in 2022 with annual increases in finance and insurance peaking at 19.8% in February.
Professional, scientific and technical sector workers also saw wage growth peak in February at 12.7%.
Top earners’ pay in these industries commonly receive performance-linked bonuses which represent a significant share of their overall remuneration, Cebr noted.
It said additional support needs to be narrowly targeted at the poorest households to prevent worseninng hardship.
“The wage data analysis adds further merit to that argument. Although variation in wage growth performance between different income groups is to be expected over time, the stagnation in pay among the poorest workers is coming at a time of extraordinary price rises and their ability to dip into savings is usually limited. Hence, measures such as uprating benefits in line with current rather than earlier inflation readings should again be considered as for many, it really is the worst of times,” it said.