Description
This indicator measures the proportion of employees earning less than the real living wage in Scotland.
Source
The data for this indicator is gathered through the Annual Survey of Hours and Earnings (ASHE). The survey, carried out by the Office for National Statistics (ONS) annually, is based on a 1 per cent sample of employee jobs taken from HM Revenue and Customs PAYE records. Data on hours and earnings is gathered from employers and is treated confidentially. ASHE does not cover those who are self-employed or employees who were not paid during the survey reference period.
Due to the impact of COVID on data collection and the inclusion of furloughed employees, comparisons with 2020 and 2021 should be treated with caution, with the focus on longer trends presented in the series. The proportion of employees (18+) earning less than the real living wage decreased between 2020 and 2021, continuing the downward trend seen since 2018.
The Standard Occupational Classification (SOC) is a common classification of occupational information for the UK. The most recent version of SOC, SOC 2020, was used for revised 2021 ASHE estimates and provisional 2022 ASHE estimates. More information on the impact of the change from SOC 2010 to SOC 2020 is available in the Measures of employee earnings based on SOC 2020, UK: 2021 bulletin.
This means earnings estimates for April 2021 based on SOC 2020 represent a break in the ASHE time series. Therefore, estimates pre- and post-2021 are not directly comparable.
The latest ONS ASHE publication, providing further details on this data release, can be found using the following link:
The Scottish Government has published its own analysis of the ONS ASHE data set specifically for Scotland at: https://www.gov.scot/publications/annual-survey-of-hours-and-earnings-2022/
Definitions
The Real Living Wage is an independently set hourly rate which is calculated according to the basic cost of living in the UK. The rate is normally set in the first week of November each year by the Living Wage Foundation. It is calculated by the Centre for Research in Social Policy at Loughborough University.
To calculate the percentage of employees earning less than the Real Living Wage, the number of employees earning less than the real Living Wage is divided by the total number of employees. The figure for 2022 uses the Real Living Wage rate of £9.90.
More on the Living Wage can be found at the following link:
https://www.livingwage.org.uk/what-real-living-wage
Criteria for Recent Change Arrow
This evaluation is based on: any difference within +/- 1.5 percentage points of last year's figure suggests that the position is more likely to be improving.
- A decrease of 1.5 percentage points or more suggests the position is improving; whereas an increase of 1.5 percentage points or more suggests the position is worsening
A guide to how the National Performance Indicators measure progress can be found at: https://nationalperformance.gov.scot/guide-npf-indicators
Future issues and revisions
In September 2016 the Living Wage Commission published a report setting out an aligned approach to calculating the Living Wage rates in London and the UK, based on a 6-month review of the best available evidence on living standards across the country. The report is available on the Living Wage Foundation’s website at the following link:
Calculating a Living Wage for London and the rest of the UK
Living wage calculations are normally made for employees aged 18 and over who are on an adult rate of pay and whose pay was not affected by absence during the survey pay period. However, for 2021 the survey pay period was at a time when approximately 3.7 million employees in the UK were furloughed under the Coronavirus Job Retention Scheme (CJRS) – for the 2020 survey pay period, the equivalent figure was 8.8 million. The survey collected actual payments made to each employee and the number of hours on which this pay was calculated, which for furloughed employees would be their usual hours. As a result, the Living wage calculations are for employees on adult rates of pay and whose pay was unaffected by absence unless on furlough.
In most years, around 5 per cent of employees are excluded from the survey due to having pay affected by absence. By revising the criteria for exclusion from ‘employees whose pay was affected by absence’ to ‘employees not on furlough but whose pay was affected by absence’, the proportion of employee jobs excluded in 2021 was 4.4 per cent, down from 6.0 per cent in 2020 and broadly similar to the proportions observed in surveys conducted prior to the pandemic.
Due to the impact of COVID on data collection and the inclusion of furloughed employees, comparisons with 2020 and 2021 should be treated with caution, with the focus on longer trends presented in the series.
The Standard Occupational Classification (SOC) is a common classification of occupational information for the UK. The most recent version of SOC, SOC 2020, was used for revised 2021 ASHE estimates and provisional 2022 ASHE estimates. More information on the impact of the change from SOC 2010 to SOC 2020 is available in the Measures of employee earnings based on SOC 2020, UK: 2021 bulletin.
This means earnings estimates for April 2021 based on SOC 2020 represent a break in the ASHE time series. Therefore, estimates pre- and post-2021 are not directly comparable.
ASHE data are weighted to UK population totals from the Labour Force Survey (LFS) based on region, occupation, age and sex.