United Kingdom (2)

Title of the survey

New Earnings Survey (NES)

Organization responsible

The Employment Department is responsible for planning and conducting the survey; the results are published under the responsibility of the Employment Department and Her Majesty's Stationery Office (HMSO).

Periodicity of the survey

Annual, in April.

Objectives of the survey

To obtain annual information on the level, composition and distribution of earnings of employees in all industries and occupations. The results are used by the government in monitoring and evaluating policies (e.g. taxation, public sector pay), and by non-government users (e.g. for pay negotiations in major national collective agreements, business planning and academic research).

Main labour topics covered by the survey

Employment (although the survey is not intended to give employment estimates), earnings and hours of work.

Reference period

The pay period including a specific date (normally the second Wednesday in April).

Coverage of the survey

Geographical

Great Britain. A similar but separate survey is conducted by the Department of Economic Development in respect of employees in Northern Ireland, but the results are rarely combined with those for Great Britain.

Industrial

All branches of economic activity, except the armed forces.

Establishments

All types and sizes of establishments which have paid employees.

Persons

Employees in employment. Out of scope are working proprietors and working directors who do not receive a salary, young workers below the age of 16, and unpaid family workers.

Occupations

All occupations are covered. The actual occupation reported on depends on the particular employee selected in the sample (see Sample design).

Concepts and definitions

Employment

Data refer to employees in employment. They include wage earners and salaried employees; full- and part-time employees; permanent, temporary and casual employees; apprentices, trainees and workers on probation; piece workers; home workers; and commission agents; employees temporarily present on payroll during notice period preceding retirement, resignation or dismissal; as well as employees temporarily absent from work because of paid or unpaid vacation, sickness or accident, temporary or indefinite lay off, industrial dispute, or any other reasons, whether authorized or not. Employees sub-contracted from other enterprises and employees from temporary work agencies are included under the enterprise or agency from which they are contracted. The following categories of employees are excluded: those in private domestic services; occupational pensioners; those employed in Enterprise Zones; those employed outside Great Britain; employees on temporary military service; persons on Youth Training without a contract of employment; persons working for their own spouses and clergymen holding pastoral appointments. The following categories of employees are separately identified:

Earnings

Data are collected on total gross earnings for the pay period, i.e. the total payments made to each employee prior to any statutory or other deductions, regardless of when particular payments within the total were made or whether they were all paid at the same time. Where bonuses or similar payments are not paid in each pay period, the proportionate amount for the reported pay period is included on the basis of the last payment, or next payment if known (for example, one-third of a quarterly bonus for a monthly pay period, or one quarter of a monthly bonus for a weekly pay period). Excluded are payments which were made during the pay period, but which related to another period (e.g. arrears of pay, overtime or sick pay for sickness absence outside the period); reimbursement or payments of travelling, subsistence and similar expenses incurred in carrying out the employer's business; and tips or gratuities received by the employee, but not shown in the employer's pay records. The value of benefits in kind provided by the employer is generally excluded, except for agricultural, catering and other workers whose employers provide accommodation, meals, etc. for which reckonable values for pay purposes are laid down in the Wages Orders. The corresponding amounts are included in total gross earnings, but not reported separately. The following components of pay are separately identified: Information is not obtained about other special factors which may affect the pay of individual employees such as qualifications, disability, fringe benefits or payments in kind; nor about employees' contributions and deductions from gross earnings, non-contributory pension schemes, or employers' contributions to pension schemes, etc.

Wage/salary rates

Not relevant.

Hours of work

Data are collected on normal basic hours of work and overtime hours. Normal basic hours are the number of hours, excluding all overtime and main meal-breaks, which the employee is expected to work in a normal week. They may be influenced by laws or regulations, collective agreements or establishments' internal regulations. If normal basic hours are not specified, the employee is simply classified as full-time (more than 30 hours) or part-time (30 hours or less). Overtime hours are the hours for which an employee receives overtime pay; they may include hours not actually worked but paid for, for example under guaranteed minimum overtime schemes. Total weekly hours refers to the sum of (i) the normal basic hours of an employee whose pay for the pay period was not affected by absence and (ii) the overtime hours for which the employee received overtime pay, in the pay period.

International recommendations

The definition of gross earnings complies with the international recommendations, with the following major exception: the value of payments in kind (such as food and drink, fuel, clothing, etc.) is excluded from total gross earnings, except for agricultural and catering workers. The definition of total weekly hours corresponds to the concept of hours paid for. Data on earnings and hours of work cover the same categories of employees as employment data. However, in the presentation of the results, the following categories of employees are normally excluded: those whose pay for the survey pay period was affected by absence; those not on adult rates of pay; and part-timers.

Classifications

Industrial

Employees are allocated to the activity code of the establishment or business unit in which they are employed, and data on employment, earnings and hours of work are classified according to 332 groups of the Standard Industrial Classification (SIC), 1980. This classification is not linked to the International Standard Industrial Classification of All Economic Activities (ISIC), Rev. 2, 1968; however, the forthcoming revision (SIC-1992) will be convertible to ISIC, Rev. 3, 1990.

Occupational

Employees are classified by occupation on the basis of the job title and description of the main duties as given by the employer. Data on employment, earnings and hours of work are classified according to the Standard Occupational Classification (SOC), which comprises 374 unit groups, arranged within minor, sub-major and major groups. In many areas, the SOC is convertible to the International Standard Classification of Occupations (ISCO-88) at the level of unit group; however, in some areas, it cannot be linked even at higher levels. Employees are classified into manual and non-manual occupations according to the following criteria: Manual occupations are occupations which are either in SOC major groups 5 (Craft and related occupations), 8 (Plant and machine operatives) or 9 (other elementary occupations), or specifically identified in major groups 6 (Personal and protective service occupations) and 7 (Sales occupations). Non-manual occupations are all other occupations.

Others

The survey data are also classified according to:

Sample size and design

Statistical unit

The unit of observation is the employee and the reporting unit is the employer, i.e. the employing organization whose name and address are held on the Tax Authorities' records.

Survey universe / sample frame

The sample is selected from two frames: (i) the Pay-As-You-Earn (PAYE) income tax records, kept by the Inland Revenue, and (ii) the personnel/pay records of large employers in the public and private sectors, regardless of whether employees shown on these records pay income tax. Income tax records are updated constantly, but with a certain time-lag, when the tax authorities are notified by employers. Personnel/pay records of large employers are likely to be more up-to-date.

Sample design

The survey is based on a one per cent random sample of employees who are members of PAYE income tax schemes, and is designed to represent all categories of employees in businesses of all kinds and sizes. Each year, the sample comprises all employees whose National Insurance numbers (a unique identification number randomly allocated to each employee by the social security system) end with a specified pair of digits. The same pair of digits has been used since 1975. Those individuals for whom completed questionnaires were received in successive surveys and whose classification characteristics have not changed between two successive surveys are said to form a matched sample. The matched sample represents a little over three-quarters of the complete NES sample of full-time employees on adult rates whose pay was not affected by absence. About three-quarters of the sample are identified from the lists supplied by Inland Revenue containing the selected National Insurance numbers, the names and addresses of the employers concerned and, for ease of identification for employers, the names of individual employees. This disclosure of information is authorized, for the purpose of the survey, by section 58 of the Finance Act 1969. The information is taken from PAYE records about a month before the beginning of the financial year and the survey pay period. The remaining quarter of the sample is obtained from the lists supplied directly by large organizations in the public and private sectors, of their employees with the appropriate National Insurance numbers, regardless of whether they pay income tax. The sampling fraction of one per cent gives approximately 210,000 selected employees, at around 80,000 employers, for each year's survey. The achieved sampling fraction is around 75 per cent of what it would be if the sample were a full one per cent of employees (80 per cent for full-timers, and 65 per cent for part-timers).

Field work

Data collection

This takes place in April of each year. Information for employees in the sample is obtained from employers. Questionnaires are issued for each employee in the sample, except for some large organizations which supply the information on computer listings or on magnetic tape under special arrangements with the Department. Data collection is done by permanent staff of the Department and casual staff recruited for the survey period.

Survey questionnaire

The general aim of the questionnaire is to keep the survey questions to a minimum and unchanged from year to year, so that directly comparable results are available for long runs of years. The questionnaire is accompanied by a covering letter which incorporates the statutory notice, the list of major collective agreements, the list of wages boards and councils and the list of Greater London Boroughs. Instructions are provided along with the questionnaire, with regard to each question. The questionnaire comprises the following eight sets of questions: The information provided by employers is treated strictly in confidence and used only for statistical and research purposes. The individuals about whom information is obtained are regarded simply as representatives of the industries, occupations, sex, age groups, regions, etc. to which they belong. The data extracted from the questionnaires for computer processing include neither the name nor the address of either the employee or the employer. Thus, identification of individuals in the resulting analyses is not possible. Additional information on specific topics is obtained periodically by means of a special question in the survey (e.g. holiday entitlements in 1974, 1981 and 1987, earnings by length of service in 1975, 1976 and 1979, incentive payment schemes in 1977, etc.).

Substitution of sampling units

There is no substitution of sampling units in case of total non-response (see also under Data processing and Adjustments: Non-response).

Data processing and editing

Data are processed mainly by computer. Coding of industry and occupation is mainly manual. Data checking and editing involve computer-generated queries with respect to credibility or comparison with previous year's data, which are examined manually (altogether some 140 different checks are applied). Non-response is followed by two reminder letters and subsequent telephone calls to the relevant employers.

Types of estimates

The following estimates are made from the survey data: Part-time workers are excluded from most estimates; they are analysed separately to a limited extent. Flexible time arrangements are not dealt with explicitly. Workers for whom absence during the reference period entails wage reductions are excluded from most estimates, and from all analyses of hours, hourly earnings, distributions and annual changes based on matched samples. Records with any missing data are excluded from all analyses, except in the case of normal basic hours (which are only excluded from analyses of hours and hourly earnings). Average (mean) weekly earnings of a group of employees are obtained by dividing the sum of their individual gross weekly earnings by the number of employees in the group. The averages normally exclude those who received no pay at all for the survey pay period. Average weekly hours of a group of employees are obtained by dividing the sum of their individual total weekly hours by the number of these employees. Average hourly earnings are calculated by dividing the sum of the weekly earnings of these employees by the sum of their total weekly hours. Average hours and average hourly earnings are calculated taking into account only those whose earnings were not affected by absence (and for whom normal basic and any overtime hours were reported). The distributions of earnings and hours of a group of employees are condensed and give the numbers (or percentages of the total) with earnings or hours either in particular ranges or below specified amounts. Annual increases in earnings are measured either by direct comparison of corresponding results of the two surveys, to derive changes based on complete samples, or by restricting the comparison to those employees who were classified in a similar way in both surveys, to derive changes based on matched samples. Both measures are used for different purposes. Three types of analyses are made from the survey results:

Construction of indices

None.

Weighting of sample results

The survey results are normally not weighted. Exceptionally, distributions of earnings are sometimes grossed up to estimates of the total number of employees in employment in Great Britain, taken from other sources. Grossing factors can be approximately calculated for all full-time male and female employees by comparing NES sample numbers with estimates based on the Census of Employment and quarterly employment surveys.

Adjustments

Non-response

There is no explicit treatment of non-response. Employers are required by law (under the 1947 Statistics of Trade Act) to supply the information specified by the NES, and some 98.5 per cent of individual questionnaires issued are returned.

Other bias

None.

Use of benchmark data

Not relevant.

Seasonal variations

Not relevant.

Indicators of reliability of the estimates

Coverage of the sampling frame

The coverage of full-time adult employees is virtually complete, but the coverage of part-time employees is not comprehensive. Many of those with earnings below the income tax threshold (in the 1994 NES, equivalent to full-time earnings of 66.50 pounds a week, or 288.00 pounds per month) are not covered, which excludes mainly women with part-time jobs and a small proportion of young people. On the other hand, an individual employee who is a member of more than one PAYE scheme may appear more than once in the sample, as both a full-time and part-time employee, or twice or more as a part-time employee. In addition, the sample drawn from the lists supplied by large organizations may include some employees who are not in PAYE scheme.

Sampling error / sampling variance

The standard error of estimates of earnings is 0.2 per cent for average (mean) earnings of all full-time employees on adult rates whose pay was not affected by absence. The standard errors of estimates of increases in average earnings are greatly reduced by the adoption of a sample design which provides for a substantial overlap between the samples in successive surveys. With around three-quarters overlap and a typical correlation coefficient of 0.8 between earnings in successive years, the reduction is of the order of 30 per cent compared with independent samples. The standard error is not calculated for estimates of employment or hours.

Non-response rate

In terms of questionnaires not returned, this is around 5.0 per cent.

Non-sampling errors

The main known source of bias relates to part-time employees. It is estimated that around 20 per cent of these (mainly women) with low earnings, are not covered by the survey because they are excluded from the income tax records.

Conformity with other sources

Employment numbers in the sample are compared with employment estimates from other sources. Year-to-year changes in earnings are compared with movements in the average earnings index.

Available series

Published tables include detailed listings of gross weekly and hourly earnings and weekly hours of manual and non-manual workers, by sex, according to characteristics of workers (full- and part-time, on adult and other rates of pay, by collective agreement, sector, industry, occupation, age group, region and sub-region), of the composition of earnings, of the distribution of earnings and hours in terms of ranges and quantiles, and of annual increases in average earnings (see also under Documentation).

History of the survey

The New Earnings Survey is carried out by the Employment Department under the Statistics of Trade Act, 1947. It has been held, broadly in the same form, each year since 1970, following a pilot survey in 1968. The main changes which have occurred have been as follows: In 1975, the sample was drawn from income tax records for the first time, further to the discontinuation of national insurance cards (which were exchanged each year). In 1983, the Standard Industrial Classification changed from SIC-1968 to SIC(R)-1980. In the 1982 survey, employees were coded according to both classifications. Since 1984, most analyses are for employees on adult rates, irrespective of age. Prior to 1984, the corresponding analyses related to men aged 21 and over and women aged 18 and over, irrespective of whether or not they were on adult rates. The results were presented on both bases for 1983. In 1991, the occupational classification changed from the List of Key Occupations for statistical purposes (KOS) to the Standard Occupational Classification (SOC). Employees were coded to both classifications for 1990. From 1974 to 1987, additional topics were covered by means of a special question in a particular year. In 1993 questionnaire production was automated. The use of clerical staff in local offices of the Employment Service was discontinued and the survey was controlled centrally for the first time. In 1994 Optical character reader/Document image processing (OCR/DIP) technology was introduced. Changes planned in the next few years are:

Documentation

Department of Employment/HMSO: New Earnings Survey (annual) (London). The first results are published within six months of the April reference period, and the full set of detailed analyses follows by the end of the calendar year. The results are published in six separate parts, the contents of which are as follows: Survey results contained in available additional analyses can be supplied, subject to meeting reliability criteria (see below). Analyses requiring special computer runs may be done as resources permit and against a charge. Work has also started on making results available on diskettes.

Confidentiality / Reliability criteria

The Statistics of Trade Act, 1947, under which the survey is conducted, prohibits the publication of information about indentifiable individuals. The NES is also registered under the Data Protection Act, 1984, but exempted from subject access because the data are used solely for statistical and research purposes. In addition, reliability criteria are applied as follows: the publication of NES results is restricted to figures which are derived from a sufficiently large number of employees (50 or more), and which have a sufficiently small standard error (5 per cent or less) to ensure continuing confidence in the survey. The criteria for publishing annual increases in average earnings involve the standard error of the increase and, for matched sample increases, the size of the matched sample.

Other information

Data supplied to the ILO for publication

As from 1993, data on average weekly hours actually worked and hourly earnings of full-time workers on adult rates of pay, by industry, are published in all the relevant Tables of the ILO Year Book of Labour Statistics. Data on average weekly earnings in industries not covered in the Yearbook tables are stored in the data base and can be made available on request. In previous editions of the Year Book, data on average hours of work and earnings were derived from the October Survey of Earnings and Hours of Manual Employees. This survey was carried out for the last time in October 1990. From that date, the NES is the source for all data on manual employees' earnings. The corresponding data are also published in the Bulletin of Labour Statistics. Data on average weekly earnings and hours actually worked by occupation and industry are published in Statistics on occupational wages and hours of work and on food prices - October Inquiry results, a special supplement to the Bulletin of Labour Statistics.