Index of Average Earnings 2009

Index of Average Earnings

June 2009

Statistics Unit: www.gov.je/statistics

Summary

• In June 2009 the average weekly earnings[1] of workers[2] in Jersey was 3.0% higher than in June 2008.

• The  latest  annual  increase  in  average  earnings  is  the  lowest  since  1995  and  is

1.3 percentage points lower than that for the previous twelve-month period (4.3% to June 2008).

• Average  earnings  in  the  private  sector  overall  increased  by  3.3%  over  the  year  to June 2009, the lowest annual increase since 1995.

• Increases in average earnings ranged from 0.6% in Manufacturing to 5.9% in Agriculture. Earnings in the Finance sector rose by 3.5%

• The public sector saw average earnings increase by 1.0% over the year to June 2009.

• The  average  weekly  earnings  of  full-time  equivalent  employees  (FTE)  in  Jersey  in June 2009 was £620 per week, ranging from £360 per week in Hotels, restaurants and bars to £860 per week in Finance.

Index of Average Earnings

As Figure 1 shows, the Index of Average Earnings rose from 250.6 in June 2008 to 258.0 in June 2009 (on a basis of June 1990 = 100), an annual increase of 3.0%.

Figure 1 - Index of Average Earnings (June 1990 = 100)

300 250 200 150 100 50 0

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

The annual percentage changes in average earnings since 1991 (over the twelve months to June of each year) are shown in Figure 2. The rate of increase for 2009 was the lowest annual increase since 1995.

Figure 2 - Annual Percentage Change in Average Earnings

10 8 6 4 2 0

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

The latest increase is below the long term annual average (5.2% per annum since 1991), and below the preceding five-year average of 4.2% per annum.

Individual Business Sectors

Figure 3 - Annual percentage change in average earnings by sector

10 9 8 7 6 5

4 3 2 1 0

* The Other business activities' sector includes Miscellaneous business activities' and private sector Education, health and other services'. ** Transport, storage and communications' includes Jersey Airport, Harbours, Postal Administration and Jersey Telecom.

As indicated in Figure 3, some of the notable movements in earnings of individual business sectors over the twelve months to June 2009 were:

• The  Agriculture  sector  recorded  an  average  increase  of  5.9%  in  earnings,  driven predominantly by the 4.8% increase in the minimum wage[3] implemented in April 2009.

• The smallest annual increases were seen in Manufacturing (0.6%), the Public sector (1.0%) and Hotels, restaurants and bars (2.3%).

• Average earnings in Financial services rose by 3.5%, which is below the previous five-year average for this sector (4.3% per annum).

• The remaining private sectors saw annual earnings increase by rates of between 3 and 5 percent.

Public sector

In the twelve months to June 2009 public sector earnings rose by 1.0%. No pay award has been implemented for 2009 in this sector. The overall annual rise was due to retrospective pay awards for some pay groups (including teachers and manual workers) and incremental increases.

Private Sector

In recent years the annual rate of increase has been below the levels seen between 1999 and 2001 (see Figure 4). The latest increase (3.3%) is below the preceding five-year average of 4.1% per annum and is the lowest rise since 1995.

Figure 4 - Private Sector: Annual Percentage Change in Average Earnings

10 8 6 4 2 0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Level of Earnings by Sector

The average weekly earnings for full-time equivalent (FTE) employees in Jersey in June 2009 was £620 per week[4]. Average earnings by sector ranged from £360 per week in Hotels, restaurants & bars to £810 per week in the Public sector and £860 per week in Financial services. (Figure 5).

Figure 5 - Average weekly earnings by sector, June 2009 (£ per week)

1,000 900 800 700 600 500 400 300 200 100 0

Based on data recorded for the 2008 Survey of Financial Institutions, bonus payments increase the average earnings of FTE workers in the Finance sector by around £110 per week.

Comparison with the Retail Price s Index

Historically, the long-term growth of earnings in Jersey has increased at a faster rate than retail prices; since 1990 the Jersey RPI has more than doubled, i.e. the index has increased by 112%, whilst earnings have increased by 158% over the same period.

This behaviour is also reflected in the long-term annual averages over the period 1990 to 2009, with earnings increasing by almost one percentage point per annum more than the corresponding increase in the RPI (5.1% and 4.0% per annum for earnings and retail prices, respectively).

In the twelve months to June 2009 the All-Items RPI fell by -0.4%, driven largely by the cuts in the Bank of England base rate. Average earnings increased by 3.4 percentage points more than prices[5] over the same period.

In 14 out of the last 19 years since 1991, earnings have increased at a greater rate than prices. (See Figure 6)

Figure 6 – Annual percentage changes in Average Earnings and the RPI at June each year

10 9 8 7 6 5 4 3 2 1 0 -1

94 97 06

1991 1992 1993 19 1995 1996 19 1998 1999 2000 2001 2002 2003 2004 2005 20 2007 2008 2009

Over the twelve months to June 2009, average earnings in Jersey increased by slightly more than the underlying rates of inflation as measured by RPI(X) and RPI(Y), which saw annual increases of 2.8% and 2.9%, respectively[6]. Earnings over the period, therefore, increased by 0.2 percentage points more than RPI(X) and by 0.1 percentage points more than RPI(Y).

Earnings in Jersey have increased at a faster rate than underlying inflation in seven out of the ten years since RPI(X) was introduced.

Comparison with the UK

The annual change in average earnings to June 2009 was greater in Jersey than in the UK (Table 1), the overall rate of increase of earnings being 0.9 percentage points greater in Jersey.

Private sector earnings also saw a larger annual change in Jersey, increasing by 1.7 percentage points  more  than  in  the  UK.  In  contrast,  the  annual  change  in  public  sector  earnings  was 2.7 percentage points lower in Jersey than the UK.

In both jurisdictions the annual increase in average earnings was greater than that of retail prices. Earnings rose by 3.4 percentage points more than the RPI in Jersey and by 3.7 percentage points more than the RPI in the UK.

With respect to the underlying rate of inflation, the difference between the rates of increase of average earnings and RPI(X) was higher in the UK than in Jersey, by 1.1 and 0.2 percentage points respectively.

However, in light of the reduction in the rate of VAT in the UK in December 2008, the most direct comparison of earnings with respect to underlying inflation in the two jurisdictions is afforded by RPI(Y). From this perspective, earnings increased by more than prices by similar margins, by 0.1 percentage points in Jersey and by 0.2 percentage points in the UK.

Table 1 - Annual percentage changes in Average Earnings and Retail Price s:

June 2008 to June 2009

NOTES

Methodology

• The Index of Average Earnings in Jersey is determined from earnings data collected for all States of Jersey Departments and a large representative sample of firms in the private sector. The number of employees whose earnings are used to calculate the Index of Average Earnings represents nearly two-thirds (59%) of all workers in Jersey.

• Some  450  firms  in  the  private  sector  were  sent  a  survey  questionnaire;  382 completed questionnaires were received back, representing an overall response rate of 85%.

• Of the returned forms, 93% (covering over half of all private sector employees) were matched with a return from the previous year and were subsequently validated and used in the final compilation of the Index.

• In the analysis leading to determination of the Index, full- and part-time staff are aggregated as full-time  equivalents  (FTEs).  The  average  earnings  for  each  sector  are  weighted  together according to the sectoral share of total employment. For the purposes of the Index, salaries paid monthly or four-weekly are converted to an equivalent weekly figure.

The Index of Average Earnings is compiled by the States of Jersey Statistics Unit, The Parade, St Helier, Jersey JE4 8QT. Earnings data and the report can be accessed at www.gov.je/statistics.

Please forward any enquiries to Kim Guegan, telephone: 01534 440423, e-mail: statistics@gov.je.

Statistics Unit 26 August 2009

Appendix 1

Index of Average Earnings for Jersey

(evaluated for the end of June of each year).

Appendix 2

Annual percentage change in average earnings by sector: 2002 – 2009