Mobile Menu

Business Environment Profiles - United Kingdom

Average real wage

Published: 06 December 2024

Key Metrics

Average real wage

Total (2023)

507 £

Annualized Growth 2018-23

0.8 %

Definition of Average real wage

This report analyses real average weekly earnings - before tax - for all workers over 15 years of age in all industries across the United Kingdom. Weekly earnings data is gathered each month and contains seasonally adjusted total pay, bonus pay and regular pay. Monthly data is averaged over financial years (i.e. 1 April through 31 March) and is sourced from the Office for National Statistics (ONS). The change in the average real wage is implied by comparing growth in nominal wages with the rate of Consumer Price Index (CPI) inflation. The CPI is sourced from the ONS in addition to forecast data derived from the Office for Budget Responsibility's Economic and Fiscal Outlook. The index base year is 2015 - that is, the average of the 2015 calendar year equals 100.

Analyze the wider world in which businesses operate

We measure the upstream and downstream ramifications on thousands of industries so businesses can monitor their external operating environment. Explore membership options today.

Purchase options

Included in an IBISWorld Membership

Our industry reports include 35+ pages of data, analysis and charts, including:

  • Industry Financial Ratios
    Industry Financial Ratios
  • Historical and Forecast Growth
    Historical and Forecast Growth
  • Industry Market Size
    Industry Market Size
  • Industry Major Players
    Industry Major Players
  • Profitability Analysis
    Profitability Analysis
  • SWOT Analysis
    SWOT Analysis
  • Industry Trends
    Industry Trends
  • Industry Operating Conditions
    Industry Operating Conditions

Recent Trends – Average real wage

Over the five years through 2022-23, average real wages are forecast to rise at a compound annual rate of 0.9%, as relatively resilient economic performance and rising employment levels in the pre-pandemic years encouraged firms to increase the wages of their employees - unemployment levels had also fallen to historic lows. Additionally, the government continually increased minimum and living wage floors throughout the period, albeit the impact of these wage increases was somewhat limited - this is as the effect of nominal increases was subdued by higher levels of inflation associated with a sharp devaluation of the pound in the post-EU referendum era. In 2017-18, average real wages did decline by 0.1% due to this effect; however, they reverted back into growth.

In 2020-21, average real wages actually grew by 1.3%, despite the COVID-19 (coronavirus) pandemic. However, the UK's real average wage fell over the four months through July 2020 compared to the same period during 2019 due to the pandemic-induced downturn in the UK labour market. A large proportion of the UK workforce were subject to furlough, whereby businesses called on temporary business support measures to help navigate the pandemic from operational and financial perspectives. Additionally, some firms implemented pay cuts to employees to help sustain cash reserves in times of uncertainty; however, the impact of this on average real wage were limited, to a certain degree, with those most affected seemingly falling within lower income groups. Data from the ONS showed that average weekly income fell by just 2% in April 2020 compared to April 2019, with this fall recovering and turning to an increase by August 2020 - this is presumed to have been due to the most affected industries, such as hospitality and retail, often employing those on lower wages. From August 2020 onwards, the UK's real average wage rose notably which resulted in real wages growing over the year through 2020-21, despite the pandemic woes in the first four months of the year. This trend continued through 2021-22 as the UK's real average wage rose by 4.1%. Over the current year, the real average wage in the United Kingdom is expected to fall for the first time in five years, declining by 2.1%, to £509.20 per week. This is because while wages are expected to expand during this year, the UK's level of inflation is expected to exceed wage growth. For instance, the ONS announced in August 2022 that the UK's consumer price inflation had reached 10.1% in April 2022, surpassing the peaks of the early 1990s recession that consisted of sky-high interest rates and widespread mortgage defaults. Soaring energy bills being the biggest inflation driver of inflation. During the year, the Bank of England has warned that inflation could hit 13% by the end of the year, with UK economy is now projected to enter recession from the fourth quarter of 2022.

Show more

5-Year Outlook – Average real wage

The average real weekly earnings are expected to exhibit moderate increases over the next five ye...

Looking for IBISWorld Industry Reports?

Gain strategic insight and analysis on thousands of industries.

Trusted by More Than 10,000 Clients Around the World

  • IBISWorld client - VISA
  • IBISWorld client - ADP
  • IBISWorld client - Deloitte
  • IBISWorld client - AMEX
  • IBISWorld client - Bank of Montreal