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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 2.1%. This reflects both slowing inflation and strengthening nominal pay growth.

All worker average earnings

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

Earnings decomposition

Annual pay growth was 0.7ppts 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 1.2% in January 2019, double the rate in the previous year.

Earnings inequality

Both our headline measures of earnings inequality (r75:25 and r90:10) continue to fall and at an increasingly fast pace, at a rate last seen in 2016.

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What’s around the corner:

Pay pressures and slack

Unemployment by duration

The unemployment rate fell slightly over the year to 2019 Q2, reaching 3.9 per cent. Long-term unemployment stayed broadly flat, as it has for the past 2 years, at 1 per cent.

Underemployment

Our measure of under-employment (net hours desired by those in work as well as the unemployed) increased slightly in the last quarter but is still close to its historic low.

Job-to-job moves

The trend in voluntary job-to-job moves (an indicator of worker confidence) suggests a turning point in the labour market - they have fallen 22% over the past year.

Migrant job entry

The share of jobs going to new migrants has risen slightly over the past year, to slightly under 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 reached 76.3% in 2019 Q2. The largest increases have been seen for women and people aged over 50.

Labour productivity

Labour productivity continued its post-crisis weakness and fell 0.5% on the year to 2019 Q2. This is the joint largest 12 month fall since 2012.

Training intensity

While the proportion of people receiving ‘Off-the-job’ training was slightly up over the past year at 6.7%, 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 fell slightly in the last year. While this measure has steadily increased over time, the proportion of new graduates in non-graduate occupations fell to a post-crisis low.

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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