As regular readers will be aware, each autumn we look at the hourly pay rates of thousands of staff working at hundreds of forecourts around the country, to obtain a picture of real pay rates in the petrol retail industry.
The data comes from actual pay slips (over 5,300 of them this year) so we believe it represents the most accurate snapshot of what is really being paid in the industry.
For the sake of consistency, we perform the calculations using source data from the same month each year September and capture a freeze-frame of what each hourly-paid employee received as his or her hourly rate during that month. The data is then split by geographic region and we work out the national and regional averages.
For clarity, please note that these figures are taken from forecourts across the independent sector (dealer-owned and/or commission-operated sites) and do not include any supermarket/hypermarket operated forecourts.
The overall results this year show that the average hourly pay rate at the end of September 2015 was £6.67 per hour up 2.9% from £6.48 in 2014.
During the same 12-month period, retail prices (RPI) rose by just under 0.8%, while the adult (over 21s) National Minimum Wage rose by 3% from £6.31 to £6.50 per hour.
Essentially therefore we’re seeing national wage rates rising faster than RPI inflation for the first time in a while although as you’ll see from the regional analysis, the increase in one region was just below the inflation rate.
That’s the overall picture. As far as individual regions are concerned, there were certainly some surprises this year. The regional league table looked like this (previous year’s figures in brackets):
North West England £6.75 (£6.53) +3.4%
South West England £6.75 (£6.46) +4.5%
Scotland £6.74 (£6.45) +4.4%
South East England (excluding Greater London) £6.67 (£6.63) +0.7%
Greater London £6.67 (£6.45) +3.4%
Wales £6.61 (£6.45) +2.5%
Eastern England £6.60 (£6.38) +3.3%
North of England £6.59 (£6.39) +3.2%
English Midland £6.57 (£6.46) +1.8%.
Apologies to our friends in Northern Ireland there was insufficient data available from that region this year to be able to establish a reliable figure.
So we see three regions paying above the national average (NW England, SW England and Scotland); two regions spot on the average (SE England and Greater London); and the remaining four regions slightly below.
The range either side of the average seems rather smaller than we’ve seen in many years.
The top payers were only 8p an hour above, while the bottom payer was only 10p an hour below. The average rate in each region exceeded the then-applicable National Minimum Wage for adult (ie over 25) workers of £6.50, and the minimum rate found paid by any employer (£6.27) was still significantly above the NMW rate for employees aged 21-25 (£5.13).
In terms of pay growth, the largest year-on-year increase was in the South West of England at 4.5%, closely followed by Scotland at 4.4%, whereas wage rates in the South East of England were almost static during the year with an overall increase of just 0.7%.
Within each region, the spread of pay rates between individual employers was widest in Greater London, which showed both the lowest and highest employer rates (£6.27 and £7.65 respectively). Conversely the range was narrowest in Wales, with just a 22p/hr spread between the lowest (£6.50) and highest (£6.72) hourly rates.
The long-range trend analysis suggests that the national rate in 12 months time should be around £7.00/hour; however there’s a new complication which makes that prediction very uncertain.
Bear in mind that the government has introduced the National Living Wage, which comes into effect from April 2016. This has been set at £7.20/hour for workers aged 25 and over. Whether this will result in operators switching to younger staff, or whether we see overall rates ’jump’ considerably, remains to be seen.
Of course, all employers know that the hourly gross pay rate isn’t the only cost of employment that they have to take into account.
While the final staging dates for pensions Auto Enrolment (AE) loom ever closer, it should be pointed out that many larger and some medium-sized employers are already included within that framework. The nature of the petrol retailing industry has changed considerably over recent years and with many sites now operated as part of a group, the number of employees across all of their forecourts can range from 50 to 120 or more. Employers of that size will already have reached their AE staging date, or will do so within the next few months.
Quite apart from admin costs, they face making a hidden pay increase in the form of employer contributions into those schemes and many employees will not be aware of that when they look at their take-home pay.
Reminder National Minimum Wage Rate from October 1
The NMWR increased on October 1 ie just a few weeks after these figures were compiled to:
£6.70 per hour for employees 21 years of age and over (up from £6.50)
£5.30 per hour for employees between 18 and 21 years of age (up from £5.13)
£3.87 per hour for employees 16 and 17 years of age (up from £3.79)
National Living Wage employees over 25 from April 2016 = £7.20/hour.
Finally, special thanks to Craig Anderson and his colleagues at PAYEPeople and to Nigel Ormerod at EKW Westhoughton without whom we wouldn’t be able to bring you these reports each year.