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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

In the most recent data, real median pay grew by 1.8%. This is a slight tailing off compared to the 2.0% over summer 2019.

All worker average earnings

Employee earnings continue to outstrip self-employed earnings. The gap has increased slightly over the past year.

Earnings decomposition

Pay growth was 0.6ppts higher as a result of compositional effects (e.g. due to expanding jobs in high-paying occupations) than it would have been absent these effects.

Pay rises

Median year-on-year real hourly pay growth for employees in work over a year (both job stayers and changers) stood at 2.0% in April 2019, 1.3ppts higher than the previous year.

Earnings inequality

Both our headline measures of earnings inequality (r75:25 and r90:10) continue to fall. The 90:10 gap has closed by more than 10% over the past decade.

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What’s around the corner:

Pay pressures and slack

Unemployment by duration

The unemployment rate appears to have bottomed out, staying at 3.8% in 2019 Q4. As a result of the coronavirus crisis, unemployment is likely to now be rising.

Underemployment

Under-employment was down on the year in 2019 Q4 and close to its historic low, suggesting a very tight labour market.

Job-to-job moves

The proportion of workers voluntarily moving job (an indicator of worker confidence) was up on the year, but still some way off pre-recession levels.

Migrant job entry

The proportion of jobs going to new migrants has risen slightly over the past year but remains below the 2017 peak.

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What’s in the pipeline:

Long-term labour market health & efficiency

Workforce participation

The labour force participation rate of 18-69 year-olds reached 76.6% in 2019 Q4. The largest increases have been among older workers, partly in response to the rising state pension age.

Labour productivity

Labour productivity continues to disappoint and grew only 0.1% in the year to 2019 Q4.

Training intensity

While the proportion of people receiving ‘off-the-job’ training was slightly up over the past year, the long-term trend still shows a big fall in training intensity over the past 20 years.

Graduates in non-graduate roles

The proportion of graduates in non-graduate roles is unchanged in the past year, at 36.2% of all graduates.

PDF Briefing

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RF’s quarterly earnings outlook four page briefing paper.

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All Data Spreadsheet

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