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Factsheet: Public-sector Employment and Wage Trends

Key Takeaways 

  • The share of public-sector employment in total employment has been relatively stable once reclassification effects are taken into account. In 2023 around 17% of the total workforce worked in the public sector. With NHS employment rising, the share of central government employment in public-sector employment is on the increase. 
  • Since mid-2021 average weekly earnings have been higher in the private than in the public sector. Since the beginning of the century this has only otherwise been the case in 2000. Moreover, there has been a compression of pay within the public sector. Historically average weekly earnings have been higher in the public than in the private sector as educational attainment and skills are generally higher in the former. 
  • Between mid-2021 and mid-2023 public-sector real wage growth was negative, with the result that real average weekly earnings have still not returned to pre-Covid levels. By contrast, real average weekly earnings in the private sector have been higher than pre-Covid with the exception of the furlough period in 2020. 

The share of public-sector employment in total UK employment dropped from 22% in 2010 to around 16.5% in 2018 and has since only gradually increased again. In absolute numbers public-sector employment was – at 5.9m – around 560,000 lower in 2023 than in 2010. 

However, these headline changes reflect more sectoral reclassifications than actual trends. Among other reclassification changes, Further Education and Sixth Form College corporations in England were included in the public sector before mid-20212 but have been included in the private sector since then. Going the other way, Lloyds Banking Group plc and Royal Mail plc were reclassified from the public to the private sector at the end 2013. Once these reclassification changes are taken into account, the drop in the share of public-sector employment in total employment was much more modest and public-sector employment was in fact marginally higher in absolute terms in 2023 than in 2012. 

The share of public-sector employment in total employment varies considerably across the regions of the UK. In 2023, in the East and South East only 15% of the total workforce was employed in the public sector. This contrasts with 26% in Northern Ireland. 

Within the public sector, central government is taking an ever larger employment share, rising from 44% in 2010 to 62% in 2023. Both local government and public corporations saw declines in their shares over that period. 

Much of this can be explained by the rapid rise in NHS employment, which went from 1.6m in 2010 to 2m in 2023. By contrast, employment in the civil service and in education remained reasonably stable over that period.

Average weekly earnings in the private sector dropped sharply at the onset of the Covid pandemic in early-2020 when many workers were moved to the government’s furlough employment support scheme. Average weekly earnings recovered quickly though and with the exception of March 2021 (when bonus pay was below trend) has seen steady growth since. 

By contrast, average weekly earnings in the public sector continued to grow during the first year of the Covid pandemic but then trended sideways until early-2023. Since then it has grown more or less in line with private-sector earnings (the spike in June 2023 reflects the one-off bonus payment to NHS workers). 

Notably, as a result of these diverging trends, average weekly earnings in the private sector have been higher than in the public sector since mid-2021. 

This contrasts with the long-term trend. In the 290 months between January 2000 and February 2024, average weekly earnings in the private sector were higher than in the public sector in only 49 of them (16%) – 30 of which since mid-2021. The last time average weekly earnings in the private sector were higher than in the public sector over several consecutive months was in 2000. 

According to the Institute of Fiscal Studies, several professions in the public sector including nurses but in particular teachers and hospital doctors have experienced much worse pay growth than the average public-sector worker. This reflects a (deliberate) compression of public-sector pay within and across professions. This contrasts with developments in the private sector over the same period. Historically average pay in the public sector has been higher than in the private sector as the average level of educational attainment and skills is higher in the former than in the latter. 

With consumer price inflation accelerating from early-2021 onwards (taking annual CPIH from 0.8% in December 2020 to a peak of 9.6% in October 2022), moderate nominal average weekly earnings growth initially turned into modest real growth and then negative real growth. This was particularly notable in the public sector: in the 24 months between July 2021 and June 2023, real average weekly earnings growth was negative in 22 of them. In the private sector this was the case in 14 out of those 24 months. 

As a result (and ignoring the one-off spike in June 2023), real average weekly earnings in the public sector were well below their pre-Covid level between mid-2022 and late-2023 and are only now close to pre-pandemic levels. This contrasts with developments in the private sector, where real wages have been higher than pre-Covid since the end of the furlough period. 

Public-sector pay accounts for a large part of the public-sector spending and as such plays an important role in the financial stability of local governments and other public-sector bodies. Recent earnings trends show a compression of public-sector pay within and across professions, with the result that public-sector average weekly earnings have fallen behind those in the private sector. This suggests that public-sector wages in general and for certain professions in particular face significant upward pressure, potentially straining public-sector budgets even further.  

If you would like to discuss what insights and lessons you could take away from recent public-sector and private-sector employment and wage trends, please talk to us.  

UK Public Finances

In 2022-23 public-sector net borrowing excl. public-sector banks amounted to 5.1% of GDP. Central government is responsible for the overwhelming share of public-sector net borrowing.  In 2022-23 public-sector net debt was close to 100% of GDP – about average for an advanced…
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England Population 

The population of England is growing and ageing rapidly. The South West has by far the oldest population, London the youngest.  The total fertility rate varies widely across local authority districts and is not high enough to replace the population. Similarly, age-standardised…
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Local Government Capital Expenditure and Stock 

In 2022-23 English local authorities spent a third of their capital expenditure on housing and about a quarter on highways and transport. In 2022-23 capital expenditure, which was down by 7% in real terms on 2018-19, was mainly used for new…
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Corporate Reporting Standards and Requirements

Rapid increase in the number of corporate reporting standards and requirements aimed at raising transparency and accountability and ultimately improving corporate performance.  Reporting requirements cover, among other things, climate- and nature-related financial disclosures, environmental and social sustainability along the value chain, strategy…
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Climate Change

Average earth surface temperature is now ~1.1°C higher than before the industrial revolution. Ocean surface temperature also increased significantly. There is clear scientific evidence that recent climate change is man made.  Climate change manifests itself in rising temperatures and changing weather patterns….
Read More

Factsheet: England Population

Key Takeaways 

  • The population of England is growing and ageing rapidly. The South West has by far the oldest population, London the youngest. 
  • The total fertility rate varies widely across local authority districts and is not high enough to replace the population. Similarly, age-standardised mortality rates and life expectancy varies widely across England. 
  • In 2021 net migration stood at nearly 500,000. London has the highest share of foreign-born residents, the North East the lowest. London is losing population to other regions in England. 

In mid-2021 the resident population in England was 56.5m, up from 53.1m in mid-2011 (+6.6%). There were marginally more women than men (51% vs 49%), while the median age was 40.5 years, up from 39.4 years a decade earlier. 

Between mid-2011 and mid-2022 the number of people aged 0 to 19 years increased by 2.6%, that of people aged 20 to 64 years (commonly defined as ‘the working age’) by 4.3% and that of people aged 65 years and over by 19.9%. As a result, for every person aged 65 years and over there were around three people of working age – down from nearly four people in mid-2011. This is referred to as the old-age dependency ratio. 

The age structure among English regions varies considerably. In terms of the old-age dependency ratio, the South West has by far the oldest population of all the English regions, with only 2½ people of working age for every person aged 65 years and over, followed by the North East at 2¾. At the other end of the spectrum is London with nearly 5½ people of working age for every person aged 65 years or over. The differences are much wider still on a more detailed geographic breakdown, with around 12 people of working age for every person aged 65 years and over in the London Borough of Tower Hamlets and less than 1½ in North Norfolk.

The picture is more similar when it comes to young people of schooling age (5 to 19 years): in every English region there are between 3 and 4 people of working age for every person of schooling age. 

There were 595,948 live births in England in 2021. The total fertility rate (TFR) for England was 1.62 children per women in 2021, the second lowest since the early 1940s. Westminster had the lowest TFR at 1, while Luton had the highest at 2.23. Luton was also the only local authority district in which TFR exceeded the replacement rate of 2.1 required to stabilise the population in the absence of immigration. 

In 2021 there were 549,349 deaths from all causes in England, the second highest number since the mid-1970s because of the Covid pandemic. Age-standardised mortality rates (ASMRs), which take account of the population size and age structure of a particular location, vary widely across English regions (and males and females), with the lowest recorded in London at 906 per 100,000 people, followed by the South East (908.7) and South West (913.1). By far the highest was recorded in the North East at 1110.1. 

These regional differences are also reflected in life expectancy at birth and later on in life. In the period 2012-14 (the latest available date), male life expectancy at age 65 years ranged from 17.9 years in the North East to 19.3 years in the South East and South West. Female life expectancy at age 65 years was lowest in the North East at 20 years and highest in London at 21.9 years. The differences are much more pronounced on a local authority level, with male life expectancy at age 65 years of 15.9 years in Manchester and 21.6 years in Kensington and Chelsea. Life expectancy was also lowest in Manchester for females (18.8 years) and highest in Camden (24.6 years). 

International migration statistics are not available on a regional level. In the period July 2022 to June 2023 UK net migration (immigration minus emigration) has been provisionally estimated at 672,000, up from 607,000 in the year-earlier period, and more than twice as high as in any other respective period in previous years. Net migration of EU nationals is now negative, with the sharp jump reflecting net migration of non-EU nationals. The main reason for immigrating to the UK was work, followed by study. Current migration statistics are volatile because of global humanitarian crises. 

In 2021, the usual resident population in English regions was overwhelmingly born in the UK. The share of those born outside the UK in the resident population was lowest in the North East at 6.8%, followed by the South West at 10.2%. Outside London, the highest share was in the South East at 15.8%. London is the exception with a share of 40.6%. 

London’s unique population characteristics are also reflected in internal migration. For the year ending in June 2020 (the latest available data), London lost more than 100,000 residents to other English regions, with positive net migration only for those aged between 20 and 29 years. The pattern for London was similar in the previous year, suggesting that this significant outflow was not mainly due to the COVID-19 pandemic in 2020.

The size and composition of the UK population on the national, regional and local levels is one of the most important factors policymakers will need to consider when designing and implementing policies. It is of crucial importance for the local labour market and demand for public services at all levels of government. The UK population also differs significantly across the regions and smaller geographical units, giving rise to particular location-specific challenges and opportunities for policymakers. 

If you would like to find out more about the topics discussed in this factsheet and what these might mean for your operations, please talk to us. 

UK Public Finances

In 2022-23 public-sector net borrowing excl. public-sector banks amounted to 5.1% of GDP. Central government is responsible for the overwhelming share of public-sector net borrowing.  In 2022-23 public-sector net debt was close to 100% of GDP – about average for an advanced…
Read More

Local Government Capital Expenditure and Stock 

In 2022-23 English local authorities spent a third of their capital expenditure on housing and about a quarter on highways and transport. In 2022-23 capital expenditure, which was down by 7% in real terms on 2018-19, was mainly used for new…
Read More

Public-sector Employment and Wage Trends

The share of public-sector employment in total employment has been relatively stable once reclassification effects are taken into account. In 2023 around 17% of the total workforce worked in the public sector. With NHS employment rising, the share of central government…
Read More

Corporate Reporting Standards and Requirements

Rapid increase in the number of corporate reporting standards and requirements aimed at raising transparency and accountability and ultimately improving corporate performance.  Reporting requirements cover, among other things, climate- and nature-related financial disclosures, environmental and social sustainability along the value chain, strategy…
Read More

Climate Change

Average earth surface temperature is now ~1.1°C higher than before the industrial revolution. Ocean surface temperature also increased significantly. There is clear scientific evidence that recent climate change is man made.  Climate change manifests itself in rising temperatures and changing weather patterns….
Read More

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