New measure of average earnings

The Office for National Statistics has introduced a new measure of average earnings. Average Weekly Earnings (AWE) has replaced the Average Earnings Index (AEI). Both measures are based on the Monthly Wages and Salaries Survey but they calculate average earnings differently, the main difference being that the AEI is based on industry employment weights fixed at the previous July while AWE revises the weights every month. This means if the proportion of employees in a low-paid sector increases then AWE growth will fall, even if there is no change in pay rates, while the former AEI would not be affected. This issue is examined in Economic & Labour Market Review: www.statistics.gov.uk/elmr/09_07/downloads/ELMR09_07Duff.pdf