The SPE’s latest survey (for 2020) of economists’ salaries was published at the end of last year. This is an edited version. The full report, compiled by Ian Mulheirn, can be read at https://spe.org.uk/reading-room/salary-survey/.1
The Survey received replies from 104 respondents of whom 17 per cent were women. Inevitably all the results of our salary survey have to be treated with caution. We have to be conscious of the risk of selection bias in the respondents and the limited sample size when drawing any conclusions. In particular there was a big drop in the number of responses from economists in the public sector, from 49 last year, to just 13 this. Nevertheless, the survey represents a useful window on pay in the profession.
In summary —
This year’s survey shows that the typical increase in Members’ pay overall was a healthy 5.0 per cent over the year, besting the 2.5 per cent recorded in our last survey, and well above the 2.9 per cent increase in median weekly full-time earnings across the economy as a whole in 2018-19. With CPIH inflation running at 1.7 per cent in 2019, these suggest the sector saw strong real-terms earnings growth last year. Median basic salaries, rose by a slightly weaker 3.0 per cent solid real-terms growth nonetheless.
Average total cash compensation was highest among financial sector respondents, at £209,000. Meanwhile the average in consulting stood at £130,000, industry £108,000 and the public sector £90,000.
Salaries and Financial Compensation
Table 1 shows the distribution of salaries, including income from self-employment, and of total cash compensation (TCC), adding in salaries, bonuses and the value of any shares received, and compares these with last year’s results.
Average base salaries of respondents were up slightly on last year, at around £102,000, which may have been driven in part by a reduction in the proportion of respondents from lower-paid roles in the public sector. The median base salary was up on both 2018 and 2019.
With inflation running at 1.7 per cent in 2019, the reported 5.0 per cent median nominal growth in TCC was very solid, and well above average full-time earnings growth across the rest of the labour market, which stood at 2.9 per cent. Median basic salary growth, at 3.0 per cent was closer to the whole-economy average.
Earnings by Sector
Table 2 shows salaries and TCC by sector. Unfortunately this year saw a big drop in the number of responses from economists in the public sector, with just 13 compared to 49 last year, accounting for just 13 per cent of all respondents versus 41 per cent for 2019. There was a small increase in the number of respondents in all other categories. 34 per cent of respondents were in financial services this year and 30 per cent in consulting, with 15 per cent working as economists in industry.2
Average salaries of respondents ranged from £132,000 for those in the financial sector, significantly higher than last year, to £88,000 in the public sector, and £92,000 in industry (‘other private sector’), the latter two categories substantially above last year’s figures but probably due to significant changes in the composition of responses here.
TCC was lower in the financial sector, at £209,000, but up in most other sectors, which left the figures closer to the levels seen in 2018 than 2019. Notably TCC was up by around £22,000 on average in consulting, despite average basic salaries being unchanged.
Sixty-nine percent of respondents reported receiving a bonus this year, 11 percentage points higher last year, but the average bonus reported was £58,000, around £10,000 lower than last year and 2018, though well up on 2017’s £42,000, owing to a handful of very large awards. Bonuses, for those receiving them, accounted for some 54 per cent of basic pay on average in the financial sector, 57 per cent in consulting, and 12 per cent in industry. Few in the public sector saw bonuses.
For employees in the private sector, schemes offering employees shares in the enterprise are much less common than bonuses, with only some 19 per cent of respondents this year reporting being in such a scheme, slightly above last year.
Pensions and Other Benefits
Table 3 shows, for each of the five sectors identified, the number of respondents who participated in pension schemes and received other benefits. Once again the great majority – 88 per cent this year, against 87 per cent last – report having some kind of pension arrangements associated with their employer (and many of the rest reported having a personal pension). The proportion in a defined-benefit scheme stood at 29 per cent this year, essentially unchanged on the last two years, despite fluctuations in the number of public sector survey respondents. The numbers in defined-benefit schemes in all other sectors were surprisingly high, at 20 per cent well up on the non public sector figure from last year.
The table also shows the numbers reporting other benefits in kind last year, which are broadly similar as a proportion of all replies to those reporting such benefits last year. About 42 per cent of respondents reported receiving medical insurance from their employer, compared to around 37 per cent last year and half the year before. The rise is perhaps unsurprising given the changing composition of survey respondents, with a higher proportion this year coming from the financial sector and consultancy, where such benefits are more common. Just 5 per cent reported having a company car this year, down from 8 per cent and 11 per cent last year and the year before, respectively.
Activity and Salary
Table 4 shows the numbers primarily engaged in each of the activities we had listed and the median salary received by those engaged in each activity. This year the proportion of respondents reporting public policy analysis to be their primary activity, dropped back from 30 per cent to 20 per cent, largely reflecting the fall in the proportion of responses from public sector economists. Econometrics, forecasting and modelling accounted for the activities of a further 21 per cent of respondents.
This year, the median reported salary received by those in general management was lower than for the last two years, and again lower than that reported by respondents in international analysis. The small number of respondents in each of these categories suggests reasons for caution in interpreting these comparisons however. The range between highest and lowest paid activities reported dropped to £67,000, down from £101,000 last year, and closer to the £70,000 of the year before that. Unfortunately it is impossible to say whether these fluctuations reflect any real shift in the underlying pay available in these sectors of the profession rather than merely reflecting the changing composition of survey respondents each year.
Demography and Salary
Respondents between 35 and 55, and those over 55, had similar median salaries, more than twice the level of under-35s. While there is an obvious correlation with age, it’s notable that respondents with 10 to 20 years’ experience with their employer saw median pay almost three times higher than those with less than 10 years.
The proportion of responses from women was 17 per cent this year but the pay gap was similar, at 31 per cent versus 34 per cent last year. Median salaries for men stood at £85,000 while for women it was £59,000. With the average age of male respondents, at 45, around 8 years older than for female respondents, some of this gap — though probably far from all — may be explained by seniority, as well as a higher proportion of men being employed in the highest-paying sector (financial services). Sadly the relatively small sample prevents us from drawing many conclusions about the state of gender pay inequality across the profession.
1. This Newsletter has published summaries of the annual salary survey conducted by the Society of Business Economists regularly in the past. In January 2018 the SBE changed its name to the Society of Professional Economists. We are grateful to the SPE for permission to publish this edited version of the 2019 survey.
2. Two respondents cited more than one sector.