Scots earn more than the English for the first time as 'hourly pay overtakes south'

For decades, it has been an accepted fact of British economics that the English earn more than the Scots. But that longstanding record has finally been overturned, according to newly-published research which shows that workers north of the border are now being paid more than their English counterparts.

Typical hourly pay in Scotland has crept above that in England for the first time since records began, due partly to the two nations’ differing responses to the financial crisis of 2008 and the subsequent recession, the analysis by respected think-tank the Resolution Foundation found.

As recently as 2004, typical hourly pay in Scotland was 7.2 per cent lower than in England, the study says. But strong wage growth in the mid-2000s reduced the gap to just 2.9 per cent by 2009, when the repercussions of the crash began to be felt throughout the British economy.

In the years following the financial crisis, Scotland experienced sharp falls in employment, but people still in work saw their pay packets squeezed less than those in England. Typical (median) pay in Scotland is now £11.92 an hour, marginally higher than the £11.84 earned in England, the analysis concludes.

“As recently as a decade ago, typical workers in England earned significantly more than their counterparts in Scotland. But years of stronger pay growth in Scotland means that the English pay premium has now become Scottish pay premium for the first time ever,” said Conor D’Arcy, policy analyst at the Resolution Foundation.

Although records on the typical pay earned by workers in each part of the UK only go back as far as 1997, researchers said the scale of the gap between England and Scotland that existed at that time, as well as other pay trends, suggested Scotland had always lagged behind its southern neighbour until now.

A greater trade-union presence, more public-sector employment and lower migration rates – meaning less competition for jobs – all benefited Scotland in the years before the crash, Mr D’Arcy added. When the 2008 crisis came, the country also experienced a more “traditional recession” than England, with unemployment rising steeply but pay levels not taking as big a hit as they did south of the border.

Welcoming the figures, which are published with less than four months to go until May’s Holyrood election, the Scottish government said they showed its policies were “making a difference” to workers. But how much credit Scottish ministers should really take for the change in fortunes was “a tough one to call”, Mr D’Arcy said.

“A lot of it is just the fact that Scotland’s recession just played out a bit differently. The big question politically is what are the Scottish parties offering to make sure that continues?”

The research, part of a report entitled “The State of Working Scotland”, to be published later this week, also shows that pay in Scotland has grown faster than in any other nation or region in the UK over the past two decades. Earnings growth in Scotland has also been stronger than in England across all pay levels, other than for those at the very top.

However, around one in five workers in Scotland still earns below the low-pay threshold, and a report published last week by a Holyrood committee highlighted a concerning decline in “job quality” in recent years, with an increase in low-paid, zero-hours contracts since the recession. It said poor-quality jobs were having an adverse impact on health and called on ministers to do more to drive up standards.

Roseanna Cunningham, the Scottish government’s Cabinet Secretary for Fair Work, Skills and Training, said: “While employment law remains reserved to the UK government, the Scottish government continues to do everything we can to further improve employment standards and promote good working practices, including the Living Wage of £8.25 an hour.”

The UK government is introducing a separate “national living wage” of £7.20 an hour for workers aged 25 and over in April, which it said was expected to help around 230,000 Scots by 2020. “Our long-term economic plan has created the conditions under which Scotland is thriving as part of the UK,” a spokesperson said.

“In Scotland, growth is strong and wages are rising as part of the UK’s growing economy. The analysis by the Resolution Foundation shows that Scotland is better off as part of the UK.”