Pay rebound for workers hit by the pandemic

Construction workers are among those witnessing the biggest pay rebound

Workers and occupations hardest hit by the pandemic saw the biggest rebound in pay in 2021, official figures show.

Employees aged under 21 and those in low-paid work saw the sharpest dip and recovery, according to the Office for National Statistics (ONS).

A revival in pay rates for men has meant the gender pay gap has widened.

Chancellor Rishi Sunak is facing calls from unions to give public sector workers a significant rise when a freeze on pay is lifted.

"We need a proper plan from the chancellor [at the Budget] to get pay rising across the economy," said TUC general secretary Frances O'Grady.

"That means a pay rise for all public sector workers that at least matches the cost of living. If Rishi Sunak does not increase department budgets the pay freeze will be over in name only."

Short-term effects

The ONS figures show median weekly pay for full-time employees was £611 in April 2021, representing a 4.3% increase from the same month in the previous year.

However, the change was far more dramatic for certain sections of the workforce, owing to furlough and other effects of the Covid crisis.

For example, employees aged 16 and 17 saw pay drop by 11.4% in 2019-20, before growing by 12.5% the following year.

Construction workers saw weekly pay go up by 16.8% in 2021 compared with a fall of 10.4% a year earlier. Manufacturing employees benefited from an 8.3% increase after a 3.1% drop previously.

There were also significant regional differences, with gross weekly earnings up by 8.8% in Northern Ireland, compared with a 1.1% rise in London, in 2021.

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Nicola White, head of earnings at the ONS, said: "After virtually flatlining last year at the start of the pandemic, earnings are returning to something like their long-term trend over the last few years.

"Increases this year were most marked for the groups worst affected in 2020, such as younger people, men and those in lowest-paid jobs."

The impact of the pandemic was different for men's pay compared with women's earnings, primarily due to furlough.

The recent rebound in pay for many men resulted in a worsening of the gender pay gap between male and female earners. In April 2020, the gap was 7%, but it was 7.9% in April this year, following previous improvements.

"This isn't a reversal of the trend, it is a bump caused by the pandemic," said Sarah Coles, senior personal finance analyst at investment firm Hargreaves Lansdown.

"When the 2020 study was carried out, more men were furloughed, and half were on temporarily lower pay, so the gap looked smaller than it actually was. When the 2021 study was done, the position was reversed, so it looked larger than it really was."

Ms Coles said the gender pay gap was affected significantly by how people lived their lives and brought flexibility of work into sharp focus.

"Children make an enormous difference, but the gap doesn't widen when women take time off with their first newborn, at the average age of 31. It is later, when they reach 40, that it opens up, so the relationship between pay and parenting is more complicated," she said.