Full-time employees in the UK saw a decrease in the average earnings growth for the first time in the 21st century. After a strong wage growth in 2020 of 3.6%, in 2021, we saw growth move in the opposite direction – it decreased by 0.6%
When we consider current events such as the rising cost of living, inflation, energy bills, fuel costs, etc., workers are far worse off now than workers were before the financial crisis of 2008.
As to be expected, some regions within the UK earn more than others which can sometimes influence how hard they are hit by the current financial pressures. However, higher salaries tend also tend to mean a higher cost of living, which can end up balancing out.
Historically, London has had the highest average salary in the UK, and that remains the case again. In this article, we’ll explore the exact figure, how it compares to other regions in the UK, why salaries in London are higher, and also how it compares to other European cities.
According to 2021 data from Statista, the average salary in London is £39,716. Compared to the average annual salary in the UK of £31,285, average salaries in London are considerably higher. Keeping in mind that the UK average is inflated due to London salaries, this disparity would be even more significant if the London figures were excluded when calculating the UK average.
The region with the second-highest average salary in the UK is the South East with £32,810. Whilst this figure is considered a decent salary, London eclipses this figure handily, with London residents earning a few hundred pounds more per week in comparison.
It is thought that there is a distinct difference between the north and the south of the UK, with salaries down south being substantially higher. Whilst it’s true that the two regions with the highest salaries are in the south, national statistics show that this isn’t the complete picture.
Following closely behind the South East is Scotland at number three on the list of the highest average salaries in the UK at £31,672, surpassing the UK average. Next on the list is the East with £30,867, followed by the West Midlands at £30,000. These regions are certainly not considered the south, and whilst these regions cannot match the London range of high salaries, with average salaries in these areas so close together, it just shows that there isn’t quite as big of a discrepancy between the north and south as one might assume.
As the top five regions in the UK all have average salaries of £30,000 or more, residents in the bottom five areas aren’t quite as fortunate. Perhaps unsurprisingly, the North East of England has the lowest average annual salary in the UK at £27,515. That’s £12,201 less than London and a staggering £3,770 lower than the UK average. In second last place is the East Midlands at £28,416, which is followed closely by Wales at £28,506. Slightly higher than Wales is Yorkshire and The Humber with an annual average salary of £28,808 and finally the South West at £29,080 to round out the bottom five.
Although the median salary in these areas is much lower than in London or the UK average, the cost of living is also lower. As such, the average numbers in these regions are considered to be a good salary that can cover essential living expenses whilst leaving enough discretionary income behind. The average annual salary for all areas in the UK can be found below.
|Region||Average Annual Salary|
|Yorkshire and The Humber||£28,808|
There are a few reasons for this. Firstly, the average expenses is much higher in the capital than in the rest of the country. Residents will pay more for essentials such as food, groceries, housing, and energy in London than they would in other regions of the country or the United Kingdom. This is also reflected in the National Living Wage, which is based on the cost of living. For the UK as a whole, this number is set at £9.90 per hour, but for London, the living wage is set at £11.05 per hour. Whilst employers are not required to pay them the National Living Wage and can opt to pay their full-time employees the National Minimum Wage instead, the average person who works in London will often get paid more than their UK counterparts for the same job in order to factor in the cost of living.
Secondly, salaries vary drastically in London. Since it is a capital city and also the economic hub of the UK, it has a thriving job market with a lot of demand and opportunities. Knowing this, it is also where the highest salary jobs can be found – it is thought that a third of the top 10% of earners in the UK work in London. As such, these higher salaries significantly increase the average income in the area. Moreover, the starting salary in London is rising at record rates, keeping London number one when it comes to the best-paid jobs in the UK. Of course, this also means that there is a greater chance they will be put into higher Income Tax rates such as Higher or Additional rates as they progress, and they'll end up paying more in National Insurance contributions.
When looking at how the average annual salary in the UK compares to most EU countries, it ranks amongst the highest and certainly beats the European average. But, to get a more representative comparison of the averages in capital cities, we have used data from Payscale to compare the annual salaries in the capital cities of the five biggest European economies – Germany, UK, France, Italy, and Spain – to see how each country fares against each other.
It found that Berlin, Germany had the highest salary with an average of £43,514. Paris, France comes in second place with £40,105, over £3,000 less than first placed Berlin. Following closely behind in third place was London, with an average salary of £40,000. In fourth place is Madrid, Spain, where the average full-time employee earns £33,280. Finally, to round out the list is Rome, Italy, with an average salary of £29,867.
The highest earners in 2021 were Chief Executives, Senior Professionals, and Directors. Topping the list are Chief Executives and Senior Officials, earning £1,664.80 per week or £86,569.60 per year. As C-suite executives, they are head and shoulders above all other job roles in the UK. In second place are Marketing and Sales Directors. Tasked with increasing brand reach and exposure as well as closing deals, these directors are paid £1,442.40 per week or £75,004.80 per year.
Perhaps a surprise inclusion in the top 10 highest paying jobs is the role of a Train and Tram Driver. They round out the top 10 with an average weekly salary of £1,112.20 or an average annual salary of £57,834.40. Whilst these numbers represent average salaries in the whole of the UK, we can safely assume that the highest earners in their fields are most likely based in or around London.
|Job role||Average weekly salary||Average annual salary|
|Chief Executives and Senior Officials||£1,664.80||£86,569.60|
|Marketing and Sales Directors||£1,442.40||£75,004.80|
|Information Technology and Telecommunications Directors||£1,298.60||£67,527.20|
|Advertising and Public Relations Directors||£1,263||£65,676|
|Financial Managers and Directors||£1,235.70||£64,256.40|
|Senior Professionals of Educational Establishments||£1,140.80||£59,321.60|
|Senior Police Officers||£1,135.10||£59,025.20|
|Train and Tram Drivers||£1,112.20||£57,834.40|
According to data from Statista, the gender pay gap for all employees in 2021 was 15.4%. This is a stark difference from the 27.5% gender pay gap we had in 1997, indicating we have improved markedly since then. But, a 15.4% difference shows that we still have a long way to go if we want to eradicate the gender pay gap entirely. However, it should be noted that this data does not take into consideration the differences between job category and job title. Most of the jobs with high average earnings are as directors and senior officials in STEM (Science, Technology, Engineering, and Mathematics), and we are seeing an increase in the number of women joining these fields. This could mean that the gender pay gap will reduce significantly over the coming years.
The 40 to 49 age group has the highest average salaries for both genders. This could be due to the fact that by this age, most managerial positions start. At this age group, workers have most likely been working in their field for the better part of 20 years and have the experience and know-how to lead a successful team and/or business. Since both these males and females provide high value, they are compensated accordingly, resulting in the highest average salaries over their working life.
Below is a table that outlines the average salary for men and women in each age group.
|18 to 21||£18,392||£17,005||8.15%|
|22 to 29||£28,856||£25,115||14.90%|
|30 to 39||£34,210||£30,540||12.02%|
|40 to 49||£38,463||£31,679||21.42%|
|50 to 59||£36,000||£28,811||24.95%|
The average salary in London has always been much higher than in the rest of the UK. At £39,716 in 2021, it handily beat the average salary of £31,285 in the UK. This significant difference is mainly due to the increased cost of living in London; residents pay a premium to live in the capital city. But it also has to do with the greater amount of demand and opportunity available there since it’s the headquarters of many large businesses and conglomerates. However, this figure isn’t the highest among Europe’s five big economies – the average salary in European cities such as Paris and Berlin are both higher than in London.