Who’s been getting a pay rise?

In particular, this analysis:

• Demonstrates that the recent finding of above-inflation growth in median pay for full-time employees remaining in their jobs – rising to 4.1 per cent in 2014 – holds for all employees. However, this has been widely misinterpreted as capturing the typical pay rise experience.
• Highlights more recent research showing that median pay changes for full-time employees look very different to this, and describes how these two similar-sounding statistics capture different things.
• Shows that the majority of employees staying in the same job have in fact experienced real annual pay cuts throughout the downturn, with around half continuing to experience falling pay last year. We estimate the typical annual real pay change for all employees staying in their jobs to be around 0 per cent for 2014 (that is, half received pay rises above this level and half had a pay change below it).
• Highlights the wide variation of experiences around the typical pay change – ranging from nominal pay cuts greater than 7 per cent for the one-in-ten hardest hit, to nominal pay rises greater than 15 per cent for the one-in-ten employees experiencing the largest pay growth.
• Finds that the incidence of pay rises (that is, the likelihood that someone gets a pay rise or not) varies by group, with particular differences by age, industry, and working hours. For example:
  • Full-time employees are more likely to get a pay rise than part-time employees.
  • The likelihood of a pay rise declines with age – more than half of those aged under 35 had a pay rise in 2013.
• Highlights that while the incidence of pay rises across groups of employees is largely consistent over time, there have been some noticeable changes since 2007, including:
  • A narrowing of the gap between the lowest earners and the rest. Prior to the downturn, the one-in-ten lowest-paid employees were much more likely to get a pay rise, but their experience has been very similar to those higher up the wage distribution since 2010.
  • A reversal of the fortunes of public and private sector employees, with those remaining in jobs in the public sector now much less likely to get a pay rise.