1 month ago
The latest PAYE Real Time Information report, released by HMRC and the Office for National Statistics (ONS), offers valuable insights into employment and earnings as of December 2023. We’ve scoured the data, so you don’t have to! This article highlights the headlines for SMEs and the key trends.
PAYE is the system employers use to deduct income tax and National Insurance contributions before paying wages to employees. First introduced in 1944, PAYE is now the primary method through which employees in the UK fulfil their tax obligations.
In December 2023, the number of paid employees in the UK increased by 1% compared to the same period in 2022, marking a rise of 306,000 employees. The health and social sector witnessed the most substantial annual increase, accounting for more than 203,000 new jobs. This growth signals potential opportunities for SMEs operating in and around healthcare.
However, it's crucial to note that paid employment saw a decrease of 0.1% when compared to the previous month. Business owners should stay informed on the fluctuating job market to make decisions based on up-to-date figures.
Median monthly pay represents the income at the midpoint of all employees, representing a more accurate reflection of the ‘average’ wage. It also helps to mitigate the impact of extreme highs and lows at both ends of the pay scale.
Median monthly pay in December 2023 shot up by 6.6% compared to the same month in 2022. The transport and storage sector enjoyed the highest annual growth in pay with 9.7%, while the ‘professional, scientific and technical’ sector had the lowest increase with 4.2%.
Businesses should consider these industry-specific variations in pay growth when evaluating compensation packages and staying competitive in the job market.
The regional data in the report indicates varying growth rates across the UK. Northern Ireland showed the highest increase in payrolled employees at 1.5%, while Yorkshire and The Humber saw the lowest at 0.7%.
SMEs should align their growth strategies with regional trends, particularly when looking to expand to other areas of the country.
The age breakdown of paid employees highlights a fall in employees under 25 and an increase in the 35-49 age group.
Businesses should consider these demographic shifts when designing recruitment and retention programs to suit an evolving workforce.
The 10th percentile, the lower echelon of earners, had a monthly income equal to or below £760. SMEs might find this number useful for understanding the financial constraints of a portion of their workforce.
At the opposite end of the spectrum, the 90th percentile earned a monthly income equal to or below £5,353. Businesses can use this information to gauge the income range of a significant portion of the British workforce and make informed decisions about compensation packages and benefits.
December’s UK payroll data provides a comprehensive overview of employment trends and earnings standards. SMEs can leverage these insights to refine their strategies, address industry-specific challenges and ensure they remain competitive in a changing market.
Adapting to increased payroll expenditure can be a financial juggling act for SMEs. Fortunately, options are available to help bridge the gap between existing capabilities and higher wage costs.
While business loans can be a valuable resource, it's vital for businesses to carefully consider their financial strategy and seek professional advice when exploring this option. By using business finance wisely, SMEs can weather the challenges presented by wage bill increases.
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