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Published: 22/04/2024
The Office for National Statistics (ONS) publishes monthly updates on average weekly earnings across the whole economy and by industry and sector. This commentary relates to ONS’s EARN02 and EARN03 datasets, which cover non-seasonally adjusted earnings, excluding bonuses and including arrears.
Annual growth in construction pay still lower than other sectors
Construction wages, as measured by ONS’s Average Weekly Earnings dataset, increased by 3.7% in the year to February 2024. This was an increase on the rise of 1.7% in the 12 months to January 2024. On the month, earnings were up by 1.0%.
Across the whole economy, the average increase in wages in the year to February 2024 was 5.7%, which was a 0.4% increase compared with January 2024.
The construction index of non-seasonally adjusted earnings (K5AH) has been lower than the whole economy index (KA5H) since April 2020.
Source: ONS – Construction (K5AH) and Whole economy (KA5H), non-seasonally adjusted average weekly earnings, excluding bonuses, including arrears
Comparing pay at a sector level (with index K56S), construction workers saw the lowest annual increase in average earnings across all sectors, with 3.7%. All other sectors were up by over 5% in the same period.
Source: ONS – EARN02: Non-seasonally adjusted Average Weekly Earnings, excluding bonuses, including arrears, at sector level
The ONS data shows that the construction sector has experienced the most extreme fluctuations in earnings movement in recent years, from a 9.5% annual decrease in May 2020 to a 13.5% increase in May 2021.
Source: ONS – EARN02: Non-seasonally adjusted Average Weekly Earnings, excluding bonuses, including arrears, at sector level
BCIS Chief Data Officer, Karl Horton said: ‘The latest earnings data shows that the gap between construction and other sectors in the economy was smaller in February than the previous month, though construction is still showing the smallest annual growth.
‘With reduced demand, primarily as a result of continued high borrowing costs, and output down, in part also down to bad weather in February, there hasn’t been as much upward pressure on wages.
‘As output increases, the capacity constraints we know exist in the industry will become more apparent, and we expect those to feed through to stronger wage growth. We’re forecasting annual growth in the BCIS Labour Cost Index to be 7.9% in 2Q2024.’
BCIS produces five-year forecasts of the Average Weekly Earnings construction (K5AH) and whole economy (KA5H) time series for subscribers of BCIS Building Running Costs Online.
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