The evolution of salaries in the UK in the post-pandemic period

Blog posts

13 Jan 2025

Nick Litsardopoulos, Research Economist (Fellow)

This blog was originally published in December 2024 on the website of Adzuna, one of the largest online job search engines in the UK. 

The landscape of UK employment salaries has undergone significant transformation since the COVID-19 pandemic, revealing complex patterns of wage growth, persistent gender disparities, and the profound impact of inflation across multiple economic domains. The pandemic dramatically reshaped the UK labour market, with recent Office for National Statistics (ONS) data highlighting unexpected wage trends across various sectors. While some industries experienced significant disruption, others demonstrated remarkable resilience in compensation levels, creating a nuanced economic narrative that extends far beyond simple salary figures.

Using the Adzuna Intelligence Portal we can examine the salary trajectories in recent years. Different sectors showed markedly different salary trajectories in job vacancies, with the IT jobs leading in wage growth, with a median advertised annual salary of £50,130 across the period of Nov 2023-Oct 2024. The second place in wage growth is seen in Legal jobs with a median advertised annual salary of £46,180. Nevertheless, it is of note that from Nov 2021 to Oct 2024 the median advertised annual salary of Legal jobs has increased from £41,711 to £46,180 (i.e., 10.7%), while at the same time the median advertised annual salary in IT jobs has decreased from £52,072 to £50,130 (i.e., -3.7%). In terms of growth, the winning job sector according to the Adzuna job postings data is Social work Jobs, with a 29% median advertised annual salary increase over the period Nov 2021-Oct 2024. Teaching Jobs are in the second spot in terms of growth over the same period, with 25.4% rise, Manufacturing Jobs third with 20.2% rise, Energy Oil & Gas Jobs fourth with 19.5% rise, and on the fifth spot we find Domestic help & Cleaning Jobs with 18.6% growth. These sectors account for some of the lowest paying jobs in the UK, suggesting that there is a sort of catching up going on. 

Healthcare presented a steady profile, with a median advertised annual salary of £40,617, more balanced gender representation, and consistent wage increases during the period we examined. Scientific & QA Jobs, together with Creative & Design Jobs, PR Advertising & Marketing Jobs and HR & Recruitment Jobs, are four job sectors with traditionally high salaried jobs, but where we observe some of the lowest wage growths in the Adzuna data. In the sequence of mention the median advertised annual salary of these job sectors is, 8%, 7%, 3% and 2%. The reasons why this is so, remains a mystery, these sectors seem to be where several of the occupations most affected by AI and emerging technologies seem to be found. Advertised median salaries also differ significantly by seniority level across sectors, which can further complicate the situation, particularly when considering different career development and/or expectations. Some of the lowest salaries are offered to entry level jobs in the healthcare and nursing. More importantly however, is the fact that salaries expressed in nominal values can obscure the real value of earnings. 

 

The recent years have seen inflationary pressures attacking the British economy on different fronts, along with suppliers of goods and services hiking up their prices seeking to profiteer from volatility. The impact of inflation has been particularly devastating, creating a perfect storm of economic challenges that extend well beyond headline salary figures. Energy costs have been especially brutal, with household energy bills increasing by an unprecedented 54% in 2022, pushing many families into financial precarity. The average household now spends approximately £2,500 annually on energy, compared to £1,277 in 2020, representing a massive additional burden on already stretched household budgets.

Moreover, housing costs have also spiralled, with average UK house prices increasing by 12.6% in 2022, outpacing wage growth by significant margins. Rental markets have not been immune, with average rents in major urban centres increasing by 15.2%, creating additional pressure on workers’ disposable income. In London, average rents have been between 57.2% and 39.8% of incomes since 2015, while in other major UK cities they have remained above 20% but rarely exceeded 35%. The ONS data show that the average rent was 34.2% of a median private-renting household income in England, that is £1,178 rent compared with a £3,448 monthly income. To put this in context, in Wales it was 27.2% of the median private-renting household income, that is £667 rent compared with a £2,452 monthly income.

Food inflation has added another layer of economic complexity, with grocery prices rising by 19.1% in 2022, the highest increase in over 45 years. Staple foods have seen. The ONS Retail Price Index (RPI) average price tracker shows the dramatic price increases of staple foods: bread has increased by 22%, milk by 24%, and eggs by 32%, dramatically reducing household purchasing power and forcing many families to make difficult budgetary choices. Using the BoE inflation calculator one can easily estimate the price of a basket of goods between one period and the next.  For example, assuming the weekly basket of groceries of a family of four worth £100.00 in 2020 the inflation calculator estimates that it would cost £124.17 in October 2024, that is an increase of 24.17 percent. Adding the cost of housing to that, one can see how inflation and price hikes have eaten away the value of salaries. The inflationary pressures have effectively created a perfect economic storm. This means that despite apparent salary increases, workers are effectively earning less, a situation that has profound implications for economic stability and individual financial well-being.

What is more, despite legislative efforts, gender pay disparities remain a critical issue across the UK labour market. According to data from the ONS and Adzuna, in the UK male employees are typically paid 12.7% more than female employees. Variations exists across sectors, with the smallest 1.3% observed in the transportation and storage industry, whereas the financial and insurance industry exhibiting the largest disparity around 25.2%. Another important employment sector, that is healthcare, demonstrates a more equitable compensation structures, but at the same time it is the sector where the part-time pay gap is the largest with the estimated gender pay-gap at 27.9%. These disparities are not merely statistical abstractions but represent real-world economic inequalities that persist despite increased awareness and legislative interventions.

The post-pandemic labour market reflects broader economic uncertainties, with businesses navigating complex challenges of wage pressures, inflation, and operational constraints. Industries are forced to balance competitive compensation with increasing operational costs, creating a delicate economic ecosystem that requires sophisticated navigation. Technological disruption continues to play a significant role in this evolving landscape. The rapid digitalization accelerated by the pandemic has created new job roles, transformed existing positions, and created additional pressure on traditional compensation structures. Sectors with high technological integration, such as digital services and technology, have shown the most adaptive compensation strategies.

Ultimately, the UK’s employment salary landscape continues to evolve, shaped by pandemic aftereffects, technological changes, and persistent structural inequalities. The interplay of these factors creates a complex terrain of wage dynamics that demands ongoing analysis, adaptive strategies, and a nuanced understanding of economic complexities. Regional variations further complicate the salary landscape, with London and the Southeast experiencing the strongest wage growth, while northern regions show more moderate compensation increases. The coming years will likely require innovative approaches to compensation, with businesses and employees alike needing to develop flexible, resilient strategies to navigate an increasingly challenging economic environment.

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Any views expressed are those of the author and not necessarily those of the Institute as a whole.