A quick look at pay

Much has been written on pay and I don’t want it to be the focus of this blog. There is no apolitical way to analyse this data. The best someone can do is be transparent about their sources and methods. 

• I’m going to use 2010 as a base (Start of Tory-led Government) 
• CPI inflation because RPI is widely seen as a bit shoddy
• Median pay because it reflects a typical employee
• Annual pay because I think it’s less abstract than hourly or weekly
• Full-time employees to remove the effects of part-time hours

Across the board, pay has been squeezed for these occupations. 

And this pay squeeze continues today. Pay in the public sector (which covers most of these striking occupations) is currently growing at 3.3% while prices are growing at 10.5%. Perhaps more importantly private sector pay is growing over twice as much at 7.2%. For the last few decades public sector pay has been higher than private sector but this changed in about July 2021 and the gap has now grown to £1,356 a year difference.

Are strikers looking for a new job?

The labour force survey asks whether people are looking for a new or additional job. The results may surprise you. Nurses and teachers appear to be less likely to look for a new job than workers in general and even those looking are likely to stay in the same occupation. Perhaps people are locked into these occupations due to path-dependent investment in training (though I have met many ex-teachers who work in policy). Without the ability to easily transfer to other career paths, these workers have a higher stake in improving their current occupation.

Hours

We all have different preferences for the hours we work, and so I have looked directly at people’s desired hours. Many striking occupations would like to reduce their working hours more than the average worker. 40% of teachers would like to work fewer hours. 

Working from home

A cynic might say that I’m just trying to be topical, but I think there is something in this. Striking workers generally have very low levels of home working. I have used ‘All workers’ as a comparator but for many of these workers, a more accurate comparator group is other highly qualified skilled professionals, i.e. the alternative career paths these people might take. As the CIPD’s new labour market economist James Cockett shows in his CIPD voice article this month, 35% of professionals mainly work from home (with hybrid an even higher number). Nick Bloom a leading academic on working from home suggests that employees value hybrid working as much as a 10% pay rise. This makes these jobs more attractive (at zero cost to the employer) and jobs without home working relatively less attractive. Put another way, if all nurses were able to work hybrid they may be asking for 9% instead of 19%. 

Qualifications

Striking occupations tend to be a highly qualified group with some notable exceptions. This means they have invested a lot of money (tuition and foregone earnings from study) and expect a reasonable return, especially when weighed against alternative career paths. 

Conclusion

Striking occupations tend to be in the public sector. Their pay has been squeezed and is currently being squeezed more than their private-sector peers. These occupations tend to have low levels of home working which is highly valued by employees. These occupations tend to require high levels of qualifications from which many would reasonably assume a good return. In the current labour market, unemployment is low and people are in demand meaning workers have more bargaining power. Inflation is incredibly high and meaning that any gains to pay could soon be wiped out by rising prices. As inflation goes down and unemployment begins in rise (as most forecasts suggest it will), some of this pressure on wages may ease. 

The debate can focus on the pay demands but there are other factors at play. Clearly, some occupations feel their hours are too long. Most striking occupations lack the flexibility of home working and so other flexibility might be needed to compensate. Importantly there are some big differences between these various striking occupations. A better understanding of each of these workforces will lead to better solutions. 

_Notes

_{I will inevitably upset both sides of the debate with my numbers so here is a disclaimer on the pay data used. Every few years the system for categorising occupations is changed which makes comparisons across time difficult. In 2010 the category nurses excluded midwives for example. As I’m using summary data tables I can’t recombine the occupations easily. The FT were a bit more squeamish about this than me in a recent article where they used 2011-2020 as a range because this used the same coding system (at the obvious expense of a strange date range). Median pay could change as a result of a change in the composition of the workforce, for example, if more junior people entered and more expensive senior people left. These are relatively rough numbers that conservatively make the point that pay in these occupations has been squeezed.}

_{The labour force survey can give quite small samples for some occupations. Anyone working in this field might consider applying for secure access to the APS as the publicly available APS does not contain a four-digit SOC variable. This would enable the same analysis with a larger sample (I have found that asking the ONS politely also sometimes works).}  

_{Base sizes of each occupation in LFS}