Updated 04 February 2013
Proportion of the lowest earning 25-30 year olds that experience wage progression ten years later - technical description
| Short title | Proportion of the lowest earning 25-30 year olds that experience wage progression ten years later. |
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| Technical definition | The proportion of individuals in the bottom fifth of earners at age 25-30 that are twenty or more percentiles higher in the earnings distribution ten years later. |
| Rationale | This indicator falls under Strategic Reform Priority 3 (Help tackle the causes of poverty and improve social justice) and the cross-governmental priority on Social Mobility.
The Social Mobility Strategy committed DWP to developing an indicator of wage progression, whilst acknowledging that other indicators of labour market success will also form part of a wider suite of indicators of social mobility in adulthood. By comparing individuals to their peers through a measure of relative earnings (using an earnings distribution) the indicator is a measure of intra-generational social mobility. The indicator looks at those who start out in the bottom fifth of earners as the Social Mobility Strategy is focussed on helping those that start out at the bottom to move up. The customer group that will be eligible for in-work support under Universal Credit are likely to be concentrated at the lower end of the wage distribution. Looking at people aged 25-30 gives a less distorted picture of whether someone has actually been able to progress relative to their peers than looking at those aged 18-24. For younger people just starting off in the labour market wage progression can be very volatile, as they are more likely to be working in jobs that don’t closely match their skills or education. A movement of twenty of more percentiles represents a substantial movement up the earnings distribution so individuals have experienced a notable improvement in their relative position. A ten year period is the best balance between having enough time for individuals to experience meaningful progression and having sufficient years of data to provide a time-series of information (consistent data are available from 1997 onwards). |
| Formula | The data source used is the Annual Survey of Hours and Earnings (ASHE).
The earnings variable of interest is gross hourly earnings excluding overtime where earnings are not affected by absence. For individuals with more than one job, only their “main job” is included in the analysis (as defined by the job with the greatest gross weekly pay and then the greatest total hours). An initial cohort is formed including all individuals that are aged 25-30 and have positive earnings in the chosen start year. An earnings distribution is determined for this cohort, and the bottom quintile become the group of interest. For this initial bottom quintile there are three possible outcomes ten years later:
Worked example using ASHE 2003-2012: 3940 people aged 25-30 in 2003 had positive earnings and were in the bottom quintile 480 of these people were known to have moved up the earnings distribution by twenty or more percentiles in 2012 compared to their position in 2003 therefore, 480 / 3940 = 12.1% Note: Data may not perfectly match due to rounding. The data are not weighted as the calibration weights within the ASHE dataset are not set up for longitudinal analysis. |
| Start date | ASHE data is available from 1997, so the earliest ten year measurement period is 1997-2006. However, the ASHE sampling frame was cut in 2007 and 2008, which skews results for 1998-2007 and 1999-2008 so these data points are not reported. |
| Good performance | An improvement would be indicated by a statistically significant increase in the indicator demonstrating that more lower earners are experiencing wage progression. The magnitude of the increase required for a statistically significant change depends on the sampling variability around both the current and previous data point, for example for there to have been a statistically significant increase between 2002-2011 and 2003-2012 the proportion of the lowest earners experiencing wage progression would have had to have increased by more than 1.4 percentage points.
Changes to the size of the “evidence indeterminate” group will affect the indicator without there necessarily being a change in the proportion of individuals that experienced wage progression compared to the baseline of only those that had earnings data recorded in the end year of the period. The policy levers for influencing this indicator sit across Government, not just in DWP. Wider factors, for example general economic conditions and skill levels across the workforce, will also influence the indicator. |
| Behavioural impact | No behavioural impact is expected. |
| Comparability | This is not an internationally-recognised indicator that can be used to make comparisons. |
| Collection frequency | Annually. Data collected relate to a specific reference date in April. |
| Time lag | Provisional data relating to April are generally released in November/December of the same year. |
| Data source (which data collection it comes from) | Annual Survey of Hours and Earnings (ASHE). This is an Office for National Statistics survey and is a 1% sample of employees in the PAYE system. |
| Type of data (Whether it is an official statistic, national statistic, survey, MI ) | Survey – data not published by the Office for National Statistics in this format, produced by custom analysis of the ASHE dataset. |
| Robustness and data limitations | As ASHE is a sample survey there is a margin of uncertainty with the results, shown by the confidence interval around the point estimate . The 2003- 2012 data ( 12. 1%) have a confidence interval of ±1.0% percentage points.
ASHE is a survey of approximately 180,000 employees so the self-employed are not included in this measure. The sampling frame excludes individuals that are paid outside the PAYE system and so may be under-representative of very low-paid employees. The Department has oversight of the controls operated by the office for national Statistics as it is represented on the survey’s cross Government user group. ASHE replaced the New Earnings Survey (NES) in 2004, with the ASHE method (e.g. imputation) applied to NES data from 1997-2003 (i.e. excluding the supplementary surveys of job movers and VAT-only businesses). More information can be found in the 2004 ASHE methodology: In addition, a new questionnaire was introduced in 2005, there was a 20% cut in the sampling frame in 2007 and 2008 (the full sample was reinstated in 2009) and there were methodological adjustments in 2006 and 2007. These changes may lead to discontinuities when comparing data from different time periods. For further information see: This indicator uses unweighted data as the weighting variables within the dataset are intended for cross-sectional rather than longitudinal analysis, consistent with other longitudinal ASHE outputs within DWP. This may bias estimates as data are not necessarily representative of the employee population (calibrated to the Labour Force Survey) or adjusted for differences in response rates across firms. More information can be found in the guidance and methodology documents (link above). Although no weighting is applied to the estimates of the proportion of people experiencing wage progression, a calibration weight is applied to the ASHE dataset when calculating the underlying wage distributions. The switch to SOC2010 occupational coding on the ASHE 2012 dataset and the resulting impact on the calibration weight will affect 2003-2012 wage progression estimates by approximately ±0.5%. As this is within the ±1.0% confidence interval for this estimate then it is not judged to have a significant impact on our reporting nor will it compromise the indicator time series. Further analysis on the impacts of the switch to SOC2010 on ASHE estimates can be found on the ONS website: |
| Collecting organisation | Data are collected and processed by the Office for National Statistics. Analysis is performed by DWP analysts. |
| Return format | The unit of measurement is a percentage. |
| Geographical coverage | Great Britain. |
| How indicator can be broken down | No further breakdowns are available. |
| Further guidance | Methodology and guidance for ASHE can be found at:
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