The bulk of pay awards will remain at the same rate in 2026 as they did in 2025, according to analysis by Incomes Data Research.
IDR found that 44% of 121 employers expect pay to grow at the same rate this year, with more than three-fifths of these pay awards likely to fall between 3% and 3.99%.
Meanwhile, 28% said the level of pay rise would likely be higher than in 2025, while the same proportion thought it would be lower.
Only 11% of employers who are yet to decide on this year’s award thought it would be worth 4% or more. However, out of 75 pay deals that have already been agreed, just over a quarter (26%) will be worth 4% or more this year.
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Around half of the deals already agreed are worth 3% and 3.99%.
Most employers said affordability and inflation were key factors behind their pay decisions in the coming months.
Ninety-six per cent said affordability would have a bearing on pay outcomes, and 65% mentioned inflation, up from 60% when IDR polled employers on their 2025 intentions.
“Inflation is currently higher than it was a year ago and this has applied upward pressure on pay to some extent and the findings from our poll show that inflation continues to figure relatively highly in employers’ concerns,” said senior researcher Zoe Woolacott.
Inflation in the year to December 2025 rose slightly more than anticipated, with consumer prices index (CPI) inflation up 3.4%.
Private sector wage growth was stagnant between September and November at 4.5%, according to figures from the Office for National Statistics.
