Earnings Outlook· Labour market· Pay The RF Earnings Outlook Q4 2016 15 March 2017 Adam Corlett This Earnings Outlook looks at the final quarter of labour market data for 2016. Most importantly, inflation has risen rapidly in recent months, weighing heavily on real pay growth – though published pay statistics will take some time to fully reflect this. Indeed, our ‘Spotlight’ article notes that real pay in the public sector has likely now begun a fall that could well last for several years. Conversely, private sector pay growth will continue to outpace the headline average earnings figures. More positively, inequality between low and high earners has notably declined, helping to cushion low earners from price increases. The continued rise in labour market participation in 2016 was also very welcome. However, a range of persistent regional inequalities – including productivity and long-term unemployment – are concerning. In this briefing we use 13 indicators to take a more detailed look at underlying trends and future prospects. You can view the full interactive data here.