Scotland’s 1%

There has been a lot of recent media attention on the top 1% of income earners. But what are the characteristics of Scotland’s top 1%?

The latest good data we have on incomes is for 2009/10 (the data is from HMRC and based on taxpayer returns; it includes income from a variety of sources, including bonuses). In that year there were around 4.32m adults in Scotland, so by definition when we talk about the top 1% we are talking about 43,000 people.

To be in this group in 2009/10 you had to have gross income (from all sources) of £93,500 or over.

83% of this group are men. (This has reduced only fractionally since 1997 when 86% of Scotland’s top 1% were men.) Very few of the top 1% are under the age of 35, or over 65; again there has been little change since the late 1990s in terms of the age distribution of the top 1%.

Employment income accounts for 58% of the total income of the top 1%; self-employment income accounts for 21%; pension income 4%; and investment income 17% (by far the largest chunk of which is dividend income, with property and interest income each accounting for just 1% of the total incomes of the top 1%). Since 1997, the share of investment income has risen slightly and the share of self-employment income has fallen, with the share of employment income remaining unchanged.

We have some information on the industry sector of the top 1% (see figure below). The data shows that 16% of Scotland’s top 1% work in “professional, scientific and technical” industries, 15% work in “health and social work”, and 11% work in “finance and business services”. 15% draw at least some of their income for pensions (although this is often supplemented by income from other sources for those in the top 1%). Manufacturing, construction, production and retail industries each account for 6-7% of the top 1%.

Although there is likely to be some uncertainty and error in the sector into which individuals are classified (so for example, some in the “professional” sector may work in finance, others may work in health), it might be seen as surprising that Scotland’s finance sector does not account for a greater proportion of the top 1%.

The data does not distinguish between public and private sector employees, but with a cut-off at £93,000, it is clear that a not unreasonable number of public sector workers in Scotland are within the top 1% based on employment income alone. An interesting but somewhat time-consuming exercise would be to ascertain with more certainty the proportion of Scotland’s 1% that work in the public sector.

Does the picture change if we look at Scotland’s highest income 10,000 (roughly 0.25%)? To be in the top-10,000 in 2010 you had to have gross income of £177,000. 86% of this group are men, and the age distribution is similar to that for the top 1%.

The distribution of the top-10,000 by industry is not very different from that of the top 1%, although the share of health and education falls and the share of finance and professional industries increases.

Unfortunately the data do not give us a much more insightful picture of the top 1%. It would be useful to know how much ‘churn’ there is within this group from one year to the next. It would also be interesting to know more about the educational and socio-economic background of the top 1%. But two clear messages are: women are vastly under-represented, and high pay is not confined to the finance sector.

(figure can be enlarged by clicking on it)

1% graph

This entry was posted in Uncategorized. Bookmark the permalink.