- By Check-a-Salary
- Posted Tuesday 04
th May 2021
There are a number of factors which will affect your earning potential - education and experience, industry and company and location. There is a long-held belief that there is a North-South divide in terms of earnings, and there is some truth to that, with many areas in the North having the lowest average salaries. In contrast, Southern regions have some of the highest average salaries in the UK, and the highest average UK salaries can be found in the London region.
Working in a city will inevitably bring with it a higher salary than the same job outside of a city, and the reason for this is the higher costs associated with working in a city. This is certainly the case in London, where average salaries are £42,547.49, compared with a UK wide average salary of £30,691.62. It is not uncommon for an average London wage to be £5,000 - £10,000 (or more) higher than elsewhere in the UK.
However, London also has the largest pay gap between highest and lowest earners in the UK. It should therefore be noted that the average salary figures are skewed somewhat by a number of earners in the London region earning very high salaries - indeed, a third of all earners in the top 10% in the UK actually work in London. A lot of these high earners will work for companies who want to be based in the UK's capital, with good transport links and easy access over to Europe and beyond. It is an appealing marketplace for large companies who may wish to retain a London Head Office. Indeed, big London employers include Amazon, HSBC and Barclays Bank.
Of course, the major downside to working in London is the cost. According to trustforlondon.org.uk, it costs 20% more to achieve a decent standard of living in London, compared to the rest of the UK. Most things cost more in a city and London is no exception - travel, property (whether renting or buying), food, utilities, childcare, entertainment...the list goes on and on. If you consider that it is not unusual for those living in London to spend half their salary on rent, you get a sense of the costs associated with London living.
Some public and private sector employers enhance their employees' salaries with a 'London Weighting' allowance in order to attract people to London, and in recognition of the significantly higher costs of living and/or working in the capital. The amount paid varies, but London Weighting averages under £4,000 per annum. This figure varies across industries and some employers will pay more - for example some companies will pay more in Inner London than Outer London, and others will pay more in finance, manufacturing and the public sector.
It is interesting to note that other high earning cities in the UK include Reading, Milton Keynes, Cambridge, Slough and Oxford. All of these cities, although still expensive, will have lower living costs than London, and all have good transport links to London.
So, whilst on paper the average London salary certainly looks appealing at over £42,547.49, it's essential to look at all of the associated costs of living and/or working in London. Whilst some companies may only have an office in London, others may have regional offices which, whilst paying a lower salary, because of lower living costs, may actually work out better overall. It’s essential to work out all of your costs before you get carried away with the headline salary of a London job.
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