Section 3: Wages, Household Income and Employment

The Minimum Wage, the National Living Wage and the Living Wage Foundation

Table 3.1

Year REAL

LIVING WAGE

NATIONAL

LIVING WAGE

NATIONAL

MINIMUM WAGE

By April* LIVING WAGE 25 and over 21+ /21 to 24** 18 to 20 Under 18 Apprentice
2019 £9.00 £8.21 £7.70 £6.15 £4.35 £3.90
2018 £8.75 £7.83 £7.38 £5.90 £4.20 £3.70
2017 £8.45 £7.50 £7.05 £5.60 £4.05 £3.50
2016 £8.25 £7.20 £6.70 £5.30 £3.87 £3.30
2015 £7.85 n/a £6.70 £5.30 £3.87 £3.30
2014 £7.65 n/a £6.50 £5.13 £3.79 £2.73
2013 £7.45 n/a £6.31 £5.03 £3.72 £2.68
2012 £7.20 n/a £6.19 £4.98 £3.68 £2.65
2011 n/a n/a £6.08 £4.98 £3.68 £2.60
Sources:

  • Real Living Wage – Living Wage Foundation (Nov 2018)
  • National Living Wage and Minimum Wage – Low Pay Commission via Gov.uk (Nov 2018)

*For simplicity, the table shows that these rates are likely to be in place by April  that year, but please note:

  • The Real Living Wage is announced in November and recommended to be implemented within 6 months,
  • The National Living Wage is announced at Autumn Statement but must be implemented in April the following year
  • The National Minimum Wage is announced at Autumn Statement and must be backdated to October the same year.

**The 21-24 age category came into effect in October 2015, once the National Living Wage was introduced for those aged 25+

In April 2016 the government introduced a higher minimum wage rate for all staff over 25 years of age and call this the ‘National Living Wage’. However, the government’s ‘National Living Wage’ is different to the ‘Real Living Wage’ set by the Living Wage Foundation.

The government’s National Living Wage and National Minimum Wage rates are set by the Low Pay Commission. The UK’s Real Living Wage rate is set annually by the Living Wage Foundation and calculated by the Centre for Research in Social Policy at Loughborough University (and is informed by the Minimum Income Standard). The figure is announced every November and employers are advised to implement the new rates within 6 months of the announcement.

The National Living Wage and National Minimum Wage set by government are compulsory for employers while the Real Living Wage is voluntary.  The government rate is based on median earnings while the Living Wage Foundation rate is calculated according to the cost of living.

From April 2019, the Real Living Wage for outside of London is £9.00 per hour. The London Real Living Wage is £10.55 per hour; this figure is set annually by the Greater London Authority and covers all boroughs in Greater London. The National Living Wage for people over 25 is £8.21 per hour. From October 2018 the National Minimum Wage is £7.70 per hour for workers aged 21 to 24.

Leeds hourly wage rates

Table 3.2

2018 Residents Job count Lower 10% Earners Lower 20% Earners Lower 25% Earners Lower 30% Earners Lower 40% Earners Median Earners Top 10% Earners
FTE 327,000 £7.95 £8.70 £9.20 £9.75 £11.11 £12.48 £26.98
Part-time 92,000 £7.50 £7.83 £8.00 £8.08 £8.50 £9.19 x
Full Time 236,000 £8.57 £9.68 £10.44 £11.12 £12.35 £13.90 £27.50
2018 Workers Job count Lower 10% Earners Lower 20% Earners Lower 25% Earners Lower 30% Earners Lower 40% Earners Median Earners Top 10% Earners
FTE 404,000 £7.90 £8.70 £9.20 £9.77 £11.18 £12.60 £27.09
Part-time 111,000 £7.50 £7.83 £7.86 £8.00 £8.43 £9.05 £22.36
Full Time 293,000 £8.62 £9.79 £10.49 £11.12 £12.36 £14.05 £28.02
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2018

x = data was not statistically reliable

The Annual Survey of Hours and Earnings (ASHE) is based on a 1% sample of employee jobs taken from HM Revenue & Customs PAYE records. ASHE does not cover the self-employed or employees not paid during the reference period. The 2018 ASHE data provides earnings data during April 2018. The data splits the job count sample into percentiles which provides insight into the lowest and top earning residents and workers in Leeds.  The ONS state that the job count figures are intended to provide a broad idea of the numbers of employee jobs but they should not be considered accurate estimates and caution should be applied when using these numbers. Job count data is based on survey data within a standard variance level of +/-5%. Therefore the same caution should be applied when referencing the estimates for Leeds.

For Leeds residents, the median average full-time equivalent (FTE) wage is £12.48, the median full time wage is £13.90 per hour; the median part time wage is £9.18 per hour.  With regards people who work in Leeds (not living in Leeds); the median average full-time equivalent wage is £12.60, the median full time wage is £14.05 per hour; the median average part time wage is £9.05 per hour.

People in Leeds earning below the Living Wage Foundation’s Real Living Wage

Table 3.3

2018 (LW = £8.75) 2017 (LW = £8.45) Annual Change
Residents Job count No % Job count No % Job count No %
FTE 327,000 67,035 20.5 328,000 64,819 19.8 -1,000 +2,216 +0.7
Part-time 92,000 40,133 43.6 84,000 36,820 43.8 +8,000 +3,313 -0.2
Full Time 236,000 27,427 11.6 244,000 28,231 11.6 -8,000 -804 0.0
Workers Job count No % Job count No % Job count No %
FTE 404,000 82,820 20.5 387,000 71,683 18.5 +17,000 +11,137 +2.0
Part-time 111,000 50,129 45.2 93,000 39,308 42.3 +18,000 +10,821 +2.9
Full-time 293,000 32,556 11.1 294,000 31,481 10.7 -1,000 +1,075 +0.4
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2018

Estimates for people earning below the Real Living Wage have been calculated using the 2018 Living Wage figure of £8.75 which was in place during the survey period of the latest ASHE data released in 2018. Similarly, estimates for people earning below the Real Living Wage in 2017 have been calculated using the 2017 Living Wage figure of £8.45 which was in place during the survey period of the ASHE data released in 2017. These estimates have been made using the ASHE survey sample of job counts.  The ONS state that these are intended to provide a broad idea of the numbers of employee jobs but they should not be considered accurate estimates and caution should be applied when using these numbers. Job count data is based on survey data within a standard variance level of +/-5%.  Therefore the same caution should be applied when referencing the estimates for Leeds.x

It is estimated that 20.5% of all Leeds working residents earned less than the Real Living Wage in 2018, affecting 67,035 FTE residents. When this figure is broken down, 11.6% of full time working residents (27,427) and 43.6% of part time working residents (40,133) are earning below the Real Living Wage in Leeds. With regards workers in Leeds, 20.5% earn below the real living wage, impacting 82,820 FTE workers. This affects over 11.1% (32,556) full time workers and 45.2% (50,129) part-time workers.

 People in Leeds earning below the National Living Wage

Table 3.4

National Living Wage £7.83 (2018) National Living Wage £7.50 (2017) Annual Change
Residents Job count No % Job count No % Job count No %
FTE 327,000 32,206 9.8 328,000 32,241 9.8 -1,000 -35 0.0
Part-time 92,000 9,200 10.0 84,000 5,727 16.8 +8,000 +3,473 -6.8
Full Time 236,000 21,562 9.1 244,000 22,155 9.1 -8,000 -593 0.0
Workers Job count No % Job count No % Job count No %
FTE 404,000 40,042 9.9 387,000 37,695 9.7 +17,000 +2,347 +0.2
Part-time 111,000 11,100 10.0 93,000 9,300 10.0 +18,000 +1,800 0.0
Full-time 293,000 26,615 9.1 294,000 26,344 9.0 -1,000 +271 +0.1
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2018

The National Living Wage rate is a mandatory minimum wage for employees aged 25 and over. The rate came into place in April 2016 and this table provides insight into those working in Leeds being paid less than this. Those likely to be paid less than this rate are likely to be under 25 and on the minimum rate relevant to their age group or on an apprenticeship (see table 4.1 above).

Estimates for people earning below the National Living Wage have been calculated using the 2018 National Living Wage figure of £7.83 which was in place during the survey period of the latest ASHE data released in 2018. Similarly, estimates for people earning below the National Living Wage in 2017 have been calculated using the 2017 National Living Wage figure of £7.50 which was in place during the survey period of the ASHE data released in 2017. These estimates have been made using the ASHE survey sample of job counts.  The ONS state that these are intended to provide a broad idea of the numbers of employee jobs but they should not be considered accurate estimates and caution should be applied when using these numbers. Job count data is based on survey data within a standard variance level of +/-5%. Therefore the same caution should be applied when referencing the estimates for Leeds.

It is estimated that 9.8% of all Leeds residents earned less than the National Living Wage in 2018, affecting 32,206 FTE residents. When this figure is broken down, 9.1% of full time working residents (21,562) and 10% of part time working residents (9,200) are earning below the National Living Wage in Leeds. With regards workers in Leeds, 9.9% earn below the real living wage, impacting 40,042 FTE workers. This affects 9.1% (26,615) full time workers and 10% (11,100) part-time workers.

Hourly Wages; Leeds and UK comparisons

Table 3.5

ASHE Median  Lower 10% Top 10% Median Annual Change
£ %
Leeds Residential £12.48 £7.95 £26.98 +£0.16 +1.3
Leeds Workplace £12.60 £7.90 £27.09 -£0.01 -0.1
UK £12.78 £7.95 £28.25 +£0.29 +2.3
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2018

Median hourly wages were £12.48/hour for people in work, residing in Leeds compared with £12.60/hour for people working in Leeds (i.e. whether residents or not). Across the UK, the median hourly wage is £12.78/hour. For the lower 10% of earners, residents in Leeds are payed £7.95/hour compared to £7.90/hour for those who work in in Leeds. The top 10% of earners living in Leeds earn over £25.92/hour compared to £25.83/hour for those who work in Leeds. Median earnings have risen 1.3% on 2017 for resident workers and fallen 0.1% for workers in Leeds. Median wages have increased by 2.3% across the UK.

Weekly Wages; Leeds and UK comparisons

Table 3.6

ASHE Median  Lower 10% Top 10% Median Annual Change
£ %
Leeds Residential £458 £145 £940 +£11.00 +2.5
Leeds Workplace £461 £145 £977 +£3.80 +0.8
UK £460 £145 £1,005 +£11.00 +2.4
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2018

Median weekly earnings were £458 for people in work, residing in Leeds compared with £461 for people working in Leeds (i.e. whether residents or not). The median weekly wage in the UK was £460. For the lower 10% of earners, residents and workers in Leeds are payed £145/week. The top 10% of earners living in Leeds earn over £940/week compared to £977/week for those who work in Leeds. Median earnings have risen 2.5% on 2017 for residents and 0.8% for workers in Leeds. Median wages have increased by 2.4% across the UK.

Annual Salaries; Leeds and UK comparisons

Table 3.7

ASHE Median  Lower

10%

Top

10%

Median Annual Change
£ %
Leeds Residential £23,115 £7,730 £49,554 -£480 -2.0
Leeds Workplace £23,332 £7,727 £50,445 -£1,000 -4.1
UK £24,006 £7,740 £52,801 +£532 +2.3
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2018

Median annual earnings were £23,115 for people in work, residing in Leeds compared with £23,332 for people working in Leeds (i.e. whether residents or not). The median annual salary in the UK was £24,006. Median earnings have fallen by 2.0% on 2017 for residents and by 4.1% for workers in Leeds. Median wages have increased 2.3% across the UK.

For the lower 10% of earners, residents in Leeds are payed £7,730/year compared to £7,727/year for those who work in in Leeds. For the 10% top earners, Leeds residents earned at least £49,554/year compared to £50,445/year for workers.

Employment Trends

Table 3.8

Year Leeds UK
No % No %
2008 355,800 71.5 28,735,700 72.1
2012 344,000 68.6 28,535,500 70.5
2013 342,700 68.2 28,846,600 71.2
2014 347,400 68.9 29,369,200 72.2
2015 378,500 74.9 30,018,200 73.5
2016 374,200 74.1 30,299,400 73.9
2017 390,800 76.6 30,750,500 74.7
2018 388,900 75.0 30,933,500 75.0
Source: ONS Annual Population Survey, (Jan-Dec 2018),quarterly release, April 2019

Care should be used in interpreting the Leeds data year on year because it is sample based and with at least a 2% confidence interval in each year.

In the year to December 2018, employment in Leeds was estimated at 388,900. This is a rate of 75%, and at the same rate as the national level.

Estimates of people on Zero Hour Contracts

Table 3.9

% on zero hour UK employees on zero hour Leeds employees on zero hour*
2008 0.5% 143,000 1,779
2009 0.6% 189,000 2,072
2010 0.6% 168,000 2,062
2011 0.6% 190,000 2,030
2012 0.8% 252,000 2,752
2013 1.9% 586,000 6,513
2014 2.3% 699,000 7,986
2015 2.5% 804,000 9,468
2016 2.8% 907,000 10,478
2017 2.8% 902,000 10,942
2018 2.6% 844,000 10,111
Source: ONS Labour Force Survey, Oct-Dec 2018, Zero Hours Analysis, released February 2019

*Leeds figures are estimated using the national percentage rates on Employment figures from the APS, April 2019

National figures from the Labour Force Survey (LFS) show the number of people who report that they are on a zero-hours contract in their main employment. In Dec 2018, 2.6% of those surveyed reported being on a zero hour contract.  This equates to 844,000 people in the UK. On the assumption 2.6% of people in employment are on zero contracts in Leeds, using Employment figures for Leeds of 388,900 (Jan-Dec 2018), it is estimated that 10,111 workers are on zero hour contracts.

Unemployment Trends

Table 3.10

Year Leeds UK
No % No %
2008 24,100 6.3 1,633,300 5.8
2012 37,300 9.8 2,510,700 8.0
2013 35,900 9.5 2,486,200 7.7
2014 33,100 8.7 2,088,100 6.4
2015 23,500 5.8 1,704,700 5.4
2016 16,700 4.3 1,588,200 5.0
2017 18,100 4.4 1,441,100 4.5
2018 13,400 3.3 1,374,600 4.3
Source: ONS Annual Population Survey, (Jan-Dec 2018),quarterly release, April 2019

Unemployment figures have been falling since 2012 in the UK although Leeds saw a slight increase in 2017 it is now reaching pre-recession lows.  Since the recession in 2008, unemployment peaked at 9.8% (37,300 people) in 2012. In Leeds 13,400 people were unemployed in 2018, (a rate of 3.3%) down from 18,100 in 2017 (4.4%).

Average Household Incomes in Leeds

Table 3.11

Total Annual Income Low Average Household Income Median Average Household Income High Average Household Income
England and Wales £19,500 £39,700 £105,700
Leeds £22,800 £36,800 £60,700
Source: ONS Small area model-based income estimates, April 2018

Total annual income is the sum of gross annual income from wages, self-employment, investments, tax credits, pensions, and other benefits and income. Across England and Wales, the mean average household income ranged from £19,500 in low income areas to £105,700 in higher income areas. In Leeds, average household income ranged from £22,800 to £60,700.

Net Annual Income Low Average Household Income Median Average Household Income High Average Household Income
England and Wales £16,800 £31,900 £93,800
Leeds £16,800 £28,800 £43,600
Source: ONS Small area model-based income estimates, April 2018

In the financial year ending 2016, average net annual household income in small areas (middle super output areas) within England and Wales ranged from £16,800 per year to £93,800 per year, with around half of small areas falling in the £25,000 to £35,000 net income band. Average net annual household income in financial year ending 2016 was highest in London and its surrounding areas. Areas of lowest average household incomes were more widely spread geographically across England and Wales than areas of highest average household incomes.

On this measure, Leeds had the MSOA with the lowest household income in the whole of England and Wales.

Net Equivalised Annual Income BHC Low Average Household Income Median Average Household Income High Average Household Income
England and Wales £15,200 £29,600 £66,200
Leeds £18,500 £27,800 £37,600
Source: ONS Small area model-based income estimates, April 2018
Net Equivalised Annual Income AHC Low Average Household Income Median Average Household Income High Average Household Income
England and Wales £12,500 £26,500 £57,000
Leeds £13,600 £24,400 £37,400
Source: ONS Small area model-based income estimates, April 2018

Further Information: Living Wage and Minimum Wage Definitions

In April 2016 the government introduced a higher minimum wage rate for all staff over 25 years of age and call this the ‘National Living Wage’. However, the government’s ‘National Living Wage’ is different to the ‘Real Living Wage’ set by the Living Wage Foundation.

The government’s National Minimum Wage rates change every October and is set by the Low Pay Commission. The National Living Wage rates for those over the age of 25 change every April. The UK’s Real Living Wage rate is set annually by the Living Wage Foundation and calculated by the Centre for Research in Social Policy at Loughborough University (and is informed by the Minimum Income Standard). The figure is announced every November and employers are advised to implement the new rates within 6 months of the announcement.

The National Living Wage and National Minimum Wage set by government are compulsory for employers while the Real Living Wage is voluntary.  The government rate is based on median earnings while the Living Wage Foundation rate is calculated according to the cost of living.

Further Information: Zero Hours Contracts

National figures from the Labour Force Survey (LFS) show the number of people who report that they are on a “zero-hours contract” in their main employment. The figures are calculated from responses to the Labour Force Survey (LFS). As part of the survey the LFS asks people in employment if their job has flexible working and if so to choose from a list of employment patterns those which best describe their situation.  Only those people who select “zero hours contract” as an option are included in the analysis. The number of people who are shown as on a zero hours contract will therefore be affected by whether people know they are on a zero hours contract and will be affected by how aware they are of the concept. The increased coverage of zero hours in the latter half of 2013 and are likely to have affected the response to this question.