There’s a lot riding on the domestic consumer. Recent analysis suggests it wasn’t exports that helped the Asian countries recover from the 1998 crisis but their own consumers. In mid 2009, we’re looking at a near global crisis. It’s even less likely that countries can sit back and wait for exports to pick up.
But domestic consumers are already carrying the banks. The trillion-dollar-plus bailouts (acknowledged or not) in the US, UK and the Euro zone will result in higher taxes. Bailouts in countries like Japan, China and Russia are being financed from government reserves.
Western consumers facing higher tax bills while falling asset prices, mainly houses, have hit their wealth. They’ll be hoping for pay rises so what’s happening in the UK, for example?
Newspapers don’t write about wages. They write about pay rises. It’s easier. And it's less of a taboo than researching reality.
BELOW AVERAGE
Moreover, when I’ve seen salary surveys, I’ve been disappointed. Maybe I'm a loser. Maybe it’s because surveys and newspapers use the mean, not the median salary.
The mean, the middle number, is easier to calculate. The median is the point at which half the salaries will be above and half below. It’s more honest. You know that half the population are below the average figure.
From National Statistics and the blog Economics Help, you’ll find the median gross weekly earnings in the UK are £479 per week, ( £24,908 per year) before tax.
So who earns less than the median salary? The median for Office Administrators is £15,210, Personal Administrators, £22,069 and Retail Store Managers, £21,106, according to PayScale.
FREEZING WAGES
Sometimes we have to use the mean as average, because there’s no other way to find the information.
Average BBC wages, dividing the £969m wage bill by 23,000 are £42,130. According to BBC watchers, add pension contributions and that rises to £52,000.
But a middle-ranking BBC presenter recently blurted in an argument with a UK parliamentarian that she’s paid £92,000 a year. The MP, incidentally, earns £64,766 plus expenses but that’s another story.
The most recent salary figures were fixed in 2007, 2008 before the crisis took hold. So what is happening now?
1/3 of employers surveyed are freezing wages, including Jaguar Land Rover, JCB, BT.
Wage freezes and cuts will intensify social stratification and therefore impact markets like property or, at least, who gets to buy in the property market.
First you have the public sector pushing ahead with pay rises: NHS workers, 2.4%, MPs, 2.3%
SECTORAL SPLIT
Then you have a split within the public sector as the chiefs boost their salaries by up to 4 times the increase they pay to the peons:
Then you have sectoral splits within industry: freezes in engineering and industrial raw materials and inputs producers, increases for food manufacturing, retail and drugs. Toyota will actually cut pay in the UK by 10%.
As for the jobs market, keep your job if you can.
UK unemployment benefit is well below international levels. The Guardian quotes the example of a £30,000 a year marketing man whose spouse works. If he were French, Finish, German or Dutch, he would get about 50% of his pay until he finds a new job. In Britain, he’ll get £64.30 and that stops after six months. And it’s not as if the UK is a low-tax country !
New jobs will be harder to find. Law firms, accountants and manufacturers are not expecting any increase in graduate recruitment this year.
That leaves the public sector to take up the slack. Are banks part of the public sector now, by the way?
National Statistics is the UK data gathering agency which was rebranded from the Office for National Statistics a couple of years ago in a row over, well, statistics.
Here’s its latest report: Average earnings including bonuses fell by 0.4 per cent in the year to March 2009, down from the February rate of 0.2. Average earnings excluding bonuses, or regular pay, rose by 3.0 per cent in the year to March 2009, down from the February rate of 3.2.
In the year to March pay growth (including bonuses) in the private sector stood at -1.2 per cent compared with 3.6 per cent for the public sector. Excluding bonus payments, growth in the private sector stood at 2.9 per cent compared with 3.6 per cent for the public sector.
Consultants PriceWaterhouseCoopers are not constrained by the need to please their political masters. They’ve reported that the jump in corporate profits since the 1990s was not matched, in the UK, by rising wages.
“Pressures on real wages have also remained remarkably muted…Annual real earnings growth has averaged just 1.5% since 1995. This is considerably lower than the 4.5% annual rate during the first half of the 1970s, when unemployment was at similarly low levels to today, and just over half the 2.9% average annual rate during 1984-1989, when the UK last experienced a period of rapid and sustained growth in employment."
That's PWC's UK economic outlook from 2005. Interestingly, the 2009 outlook contains no such analysis of wages.
But domestic consumers are already carrying the banks. The trillion-dollar-plus bailouts (acknowledged or not) in the US, UK and the Euro zone will result in higher taxes. Bailouts in countries like Japan, China and Russia are being financed from government reserves.
Western consumers facing higher tax bills while falling asset prices, mainly houses, have hit their wealth. They’ll be hoping for pay rises so what’s happening in the UK, for example?
Newspapers don’t write about wages. They write about pay rises. It’s easier. And it's less of a taboo than researching reality.
BELOW AVERAGE
Moreover, when I’ve seen salary surveys, I’ve been disappointed. Maybe I'm a loser. Maybe it’s because surveys and newspapers use the mean, not the median salary.
The mean, the middle number, is easier to calculate. The median is the point at which half the salaries will be above and half below. It’s more honest. You know that half the population are below the average figure.
From National Statistics and the blog Economics Help, you’ll find the median gross weekly earnings in the UK are £479 per week, ( £24,908 per year) before tax.
So who earns less than the median salary? The median for Office Administrators is £15,210, Personal Administrators, £22,069 and Retail Store Managers, £21,106, according to PayScale.
FREEZING WAGES
Sometimes we have to use the mean as average, because there’s no other way to find the information.
Average BBC wages, dividing the £969m wage bill by 23,000 are £42,130. According to BBC watchers, add pension contributions and that rises to £52,000.
But a middle-ranking BBC presenter recently blurted in an argument with a UK parliamentarian that she’s paid £92,000 a year. The MP, incidentally, earns £64,766 plus expenses but that’s another story.
The most recent salary figures were fixed in 2007, 2008 before the crisis took hold. So what is happening now?
1/3 of employers surveyed are freezing wages, including Jaguar Land Rover, JCB, BT.
Wage freezes and cuts will intensify social stratification and therefore impact markets like property or, at least, who gets to buy in the property market.
First you have the public sector pushing ahead with pay rises: NHS workers, 2.4%, MPs, 2.3%
SECTORAL SPLIT
Then you have a split within the public sector as the chiefs boost their salaries by up to 4 times the increase they pay to the peons:
Then you have sectoral splits within industry: freezes in engineering and industrial raw materials and inputs producers, increases for food manufacturing, retail and drugs. Toyota will actually cut pay in the UK by 10%.
As for the jobs market, keep your job if you can.
UK unemployment benefit is well below international levels. The Guardian quotes the example of a £30,000 a year marketing man whose spouse works. If he were French, Finish, German or Dutch, he would get about 50% of his pay until he finds a new job. In Britain, he’ll get £64.30 and that stops after six months. And it’s not as if the UK is a low-tax country !
New jobs will be harder to find. Law firms, accountants and manufacturers are not expecting any increase in graduate recruitment this year.
That leaves the public sector to take up the slack. Are banks part of the public sector now, by the way?
National Statistics is the UK data gathering agency which was rebranded from the Office for National Statistics a couple of years ago in a row over, well, statistics.
Here’s its latest report: Average earnings including bonuses fell by 0.4 per cent in the year to March 2009, down from the February rate of 0.2. Average earnings excluding bonuses, or regular pay, rose by 3.0 per cent in the year to March 2009, down from the February rate of 3.2.
In the year to March pay growth (including bonuses) in the private sector stood at -1.2 per cent compared with 3.6 per cent for the public sector. Excluding bonus payments, growth in the private sector stood at 2.9 per cent compared with 3.6 per cent for the public sector.
Consultants PriceWaterhouseCoopers are not constrained by the need to please their political masters. They’ve reported that the jump in corporate profits since the 1990s was not matched, in the UK, by rising wages.
“Pressures on real wages have also remained remarkably muted…Annual real earnings growth has averaged just 1.5% since 1995. This is considerably lower than the 4.5% annual rate during the first half of the 1970s, when unemployment was at similarly low levels to today, and just over half the 2.9% average annual rate during 1984-1989, when the UK last experienced a period of rapid and sustained growth in employment."
That's PWC's UK economic outlook from 2005. Interestingly, the 2009 outlook contains no such analysis of wages.
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