Chart of the week: NHS staff pay and the cost of living

Each week we present analysis of data in chart form to illustrate some key issues and invite discussion. This week, Mark Dayan looks at whether the pay of NHS staff over the past 10 years has kept up with inflation and with wages in the private sector.

Data story

Published: 30/07/2020

Last week doctors and dentists were awarded a 2.8% pay increase, with some fanfare. Yet the response was largely muted, with the British Medical Association complaining that “many of the most highly skilled doctors in the NHS have seen their pay whittled away year on year with minimal or no pay rises”. How true is this? And how much difference will this latest increase make?

Wages in the NHS have grown at much less than inflation over the past decade as a whole. That means the real buying power of staff is considerably lower than it was in 2010. The chart below shows how average wages have changed since 2010 when adjusting for changes in inflation, and for changes in part-time working.  

The big drop in real wages happened at the start of the decade during a period of general public sector austerity, with no recovery since. The private sector shows a different picture. Wages fell, but then recovered strongly around 2015.

Doctors and nurses have fared somewhat worse than the average of all NHS staff, probably because pay deals favoured lower paid groups of staff. The same pattern is seen within medicine. Consultants, the most senior doctors, have seen a 14% pay cut compared to only 9% for doctors overall, and 8% for those in their first year of practice.

If doctors’ wages had kept up with inflation, they would have been paid on average £88,000 last year. In fact, they were paid £80,000. If inflation were to run at about average this year, that gap would close slightly with an average 2.8% pay increase, but would still be around £7,000.

These real pay cuts add up. Since 2010, the saving to the NHS just from pay falling behind inflation totalled £22 billion, and £3.2 billion in 2019 alone – if we assume that the same numbers of staff would have otherwise been employed at higher wages.

The BMA and other NHS unions, like the Royal College of Nursing, are pushing hard for this gap to be closed – pointing to the exceptional efforts made by staff during the pandemic and arguing that they deserve financial recognition. However, with the coronavirus having stretched the public finances once again, whether there is the political will to give up those huge savings remains to be seen.

Pay compared to 2010 earnings in real terms 29/07/2020

Chart

Note:  

Based on consumer price index (CPI).

Source:  

Nuffield Trust analysis of NHS Digital and ONS data.

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