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The Resolution Foundation Earnings Outlook

A look beyond the headline data on the forces behind current developments in pay, how the fruits are shared, and the short- and longer-term drivers of earnings growth

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What's happened:

The earnings breakdown

Median employee earnings

The most timely pay data showed median real pay growth continued to strengthen into 2018 Q4, partly because inflation ticked below its 2 per cent target.

All worker average earnings

Strong self-employed earnings growth in 2014-15 narrowed the gap between the employee average and the all worker measure, with the estimated gap staying the same since then.

Earnings decomposition

The compositional boost to pay associated with a changing workforce has been increasing in recent months, and is now above the post-2006 (the start of this series). The main contributor in recent quarters has been occupation.

Pay rises

Median year-on-year real hourly pay growth for employees in work over a year (both job stayers and changers) stood at 0.8% in April 2018, an increase on 2017.

Earnings inequality

Both our headline measures of earnings inequality (r75:25 and r90:10) continue to fall. However, a measure comparing the very highest earners with the rest would see inequality increasing. In 2018 weekly pay growth was fastest above the 90th percentile.

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What’s around the corner:

Pay pressures and slack

Unemployment by duration

The unemployment rate continued to fall in Q4 2018, reaching a record low of 3.9 per cent in January 2019. Long-term unemployment also continues to fall, but with signs that levels are plateauing.


Under-employment (net hours desired by those in work as well as the unemployed) is down on the year, but relatively unchanged over the past three quarters. It is below levels seen immediately pre-recession but not quite as low as it was in the mid-2000s.

Job-to-job moves

Voluntary job-to-job moves (an indicator of a healthy labour market and worker confidence) fell sharply in Q4 2018 for the second quarter in a row, bucking the trend of recent years. The level is now 20 per cent down on the year.

Migrant job entry

In 2018 Q4 the share of job entries made up by migrants was unchanged on the year. Since the post-referendum fall in 2016, net migration to the UK has stabilised at just below 300k.

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What’s in the pipeline:

Long-term labour market health & efficiency

Workforce participation

Labour force participation continues to rise, as it has for the every quarter since summer 2012. In Q4 2018 the rate was 0.7% up on the year.

Labour productivity

In Q3 2018 labour productivity was up on the quarter and year (by 0.9%). However in the latest data (for November) productivity growth slowed to just 0.2%.

Training intensity

‘Off-the-job’ training was unchanged on the year. Longer-term, the big picture is a large fall in training intensity over the past 20 years.

Graduates in non-graduate roles

Grads in non-grad roles reflect mismatches between qualifications and jobs, and may constrain productivity. It has risen over time and ticked up over the past year.

PDF Briefing

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RF’s quarterly earnings outlook four page briefing paper.

Read past briefings

PDF Scorecard

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All Data Spreadsheet

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