The RF Earnings Outlook Q3 2016

Two big 2016 events dominate our view of the labour market and likely developments in the coming years – the introduction of the National Living Wage (NLW) in April, and the result of the EU referendum in June.

This final Earnings Outlook of the year – capturing data up to Q3 – provides an opportunity to take stock of these developments. In particular, we now have a full picture of how earnings were performing just after the NLW’s introduction, and new forecasts from the Office for Budget Responsibility (OBR) that provide a view on how the post-referendum economy might develop. The former confirms a positive picture, with fairly strong and very progressive earnings growth into the early part of 2016. However, the latter suggests this risks being as good as it gets: new analysis in our ‘Spotlight’ article points to an earnings growth freefall setting in from the very beginning of 2017.

In terms of the period between these two phases – from around May to now – our measures add to the headlines on the flattening of employment growth, providing further evidence that the labour market has entered a ‘holding pattern’ in which not much at all has changed.

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.