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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 1.2%. This is driven by both falling inflation and strengthening nominal pay.

All worker average earnings

The gap between employee earnings and those for all workers (i.e. including the self-employed) has remained broadly stable over the past year, at around 1.5%.

Earnings decomposition

The boost to pay growth from workforce composition effects has continued to increase, mostly as a result of changes in the mix of occupations and education levels.

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.

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What’s around the corner:

Pay pressures and slack

Unemployment by duration

The unemployment rate continued to fall in 2019 Q1, reaching 3.8% - the lowest rate in more than 40 years. Long-term unemployment stayed flat at 1%.

Underemployment

Under-employment (net hours desired by those in work as well as the unemployed) has fallen by 11% over the past year. The measure is now at its lowest point in the 21st century.

Job-to-job moves

Voluntary job-to-job moves (an indicator of a healthy labour market and worker confidence) regained some of the fall seen over the last three quarters. This measure remains significantly weaker than pre-crisis.

Migrant job entry

The share of jobs going to new migrants has risen slightly over the past year, to around 20%.

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What’s in the pipeline:

Long-term labour market health & efficiency

Workforce participation

Labour force participation continues to rise and was up 0.6% up on the year in 2019 Q1. Increasing female participation is an important driver, with women now representing 47% of those economically active.

Labour productivity

Labour productivity fell 0.2% on the year in 2019 Q1, a further deterioration in the already weak recent productivity data. This continues the pattern seen since the crisis.

Training intensity

While the proportion of people receiving ‘off-the-job’ training was slightly up over the past year at 6.6%, 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 remained unchanged in the last year. This suggests that labour market mismatch has not increased but remains elevated compared to previous years.

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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