Data from Brightmine has recorded continued stability in UK pay settlements, with the median basic pay award holding firm at 3 per cent in the three months to the end of April 2025. However, beneath this consistency, there are signs of softening, with almost half of all awards now falling below the 3 per cent mark.
April brought a wave of cost increases that impacted both employers and households. Labelled by some as “Awful April”, hikes in council tax, utility bills, and changes to employers’ National Insurance contributions have all placed fresh strain on pay decisions.
This caution comes despite some positive economic news. The latest figures indicate that the UK economy grew by 0.7 per cent in the first quarter of the year, a stronger than expected rebound after months of stagnation. However, this growth is not yet reflected in pay outcomes and may be masking broader economic fragility.
Sheila Attwood, HR Insights and Data Lead at Brightmine, comments: “April’s figures are critical in setting the tone for pay deals throughout the year. And while the latest economic data show signs of growth, the subdued pattern of pay settlements indicates that many employers continue to approach wage decisions with caution in the face of ongoing cost pressures that will continue into the second half of the year. Pay awards are stable, but beneath the surface, many businesses are opting for lower rises and our headline median could therefore fall in the months ahead.”
Caution around the economy is reflected in data showing the gap between public and private sector pay awards. The private sector recorded a median pay award of 3 per cent in the 12 months to the end of April 2025, in line with the overall trend across the UK economy. In contrast, the public sector median remains higher at 5 per cent, largely due to legacy deals agreed earlier in the pay cycle.
However, early indications suggest that public sector settlements in 2025 will be more closely aligned with private sector norms, signalling a marked shift from last year’s higher increases.
“The data shows that while the public sector appears to be ahead on paper, this reflects past decisions rather than current trends,” said Attwood. “Looking ahead, we expect public sector pay awards to mirror the more restrained approach we are now seeing in the wider economy.”
