A third of pay awards are worth 4% or more
Press release June 2026
The median pay increase across the economy has remained at 3.5% in the three months to April 2026, according to the latest monitoring figures from Incomes Data Research (IDR). However, analysis of 166 new pay deals implemented across the economy between 1 February and 30 April 2026 revealed that exactly a third (33%) of all increases were worth 4% or more. This proportion has grown from 21% in March and the change has pushed the upper quartile of awards to 4.0% (up from 3.8% last month).
Increases awarded in response to the 4.1% increase in the National Living Wage (NLW) have influenced this change. On 1 April 2026 the statutory rate rose to £12.71 and this impacted many pay reviews, particularly those in low-paying areas such as care, hospitality and retail.
April continues to be the most popular month for pay setting and it remains a key milestone for the tracking of pay trends across the year.
Pay rises in the private sector
The majority of awards in IDR’s sample occurred in the private sector, so the results here echo those for the whole economy: the median held steady at 3.5% and the upper quartile also rose from 3.8% to 4.0%. Further analysis by broad sector reveals that pay outcomes in manufacturing sit a little higher than those in private services.
The median pay award in manufacturing and production held steady since March at 3.5%, although the average here ticked up from 3.4% to 3.6%, mainly on foot of a higher proportion of increases worth 4% or more. Over a third (35%) of increases were worth at least 4%, compared to a fifth in March. Increases at this level were common in engineering and among employers in the energy and water sector.
In contrast, the median pay award in private services fell from 3.5% in March to 3.3%. This is a result of a larger proportion of pay outcomes below 3%. Nearly a quarter (24%) of awards in the sector occurred at this level in the three months to April, which is up from 15% in March. However, the proportion of higher-end increases worth 4% or more grew from 21% to 36% and this pushed the upper quartile in private services from 3.5% to 4.0%. Increases at this level occurred across a number of sub-sectors such as air transport and financial services but were most common among employers in hospitality and retail.
“Although the National Living Wage has a less direct impact in manufacturing, compared to private services, we have observed an increase in the proportion of higher-end pay increases worth 4% or more among manufacturing employers. They still face pressures to offer competitive rates of pay in order to recruit and retain staff,” commented Zoe Woolacott from IDR.
Elsewhere in the economy
In the public sector, the median pay award is also 3.5%, while in the not-for-profit area we recorded a higher median of 3.6%. Nearly two-fifths (38%) of outcomes in the not-for-profit area were worth 4% or more, as employers here are particularly affected by the latest increase (of 4.1%) in the NLW.
The latest pay settlement figures are based on a sample of 166 awards from across the whole economy effective between 1 February and 30 April 2026, mostly at large organisations and together covering over 3.3 million workers. Few awards in the sample are from the not-for-profit and public sectors and therefore the results predominantly reflect the picture in the private sector.
Note for Editors
Incomes Data Research (IDR) monitors pay reviews across the economy throughout the year and publishes findings in ‘Pay Climate’, our quarterly e-bulletin, with additional monthly updates on our website: https://www.incomesdataresearch.co.uk/. Our data is used by all those concerned with decisions on pay, including employers in the private and public sectors, government bodies, trade unions and economists. We have conducted research for a wide range of clients including the Low Pay Commission and the Office of the Pay Review Bodies, as well as for a range of employers and employee representative organisations.
Median pay award figures calculated by IDR are usually somewhat lower than the regular earnings growth figures reported by the ONS each month. Our article here explains why average weekly earnings (AWE) figures do not tell the whole picture on pay growth. In particular, AWE is a monthly measure of increases in average pay including bonuses, shift and overtime, rather than the typically annual percentage increase in basic pay most employees receive under pay awards. In other words, the AWE figures are not ‘average pay increases’, as is sometimes reported, but increases in average earnings. Various factors can affect how much an employer spends on pay in a given month, such as restructuring of the operational aspects of the company, a change in working hours in response to demand, or simply staff turnover, as more experienced, higher-paid employees leave and are replaced by staff at the lower end of the earnings distribution. These factors particularly affect the AWE but are not present in the IDR figures on pay awards.
For any queries relating to this research please contact Zoe Woolacott on 01702 669549 or zoewoolacott@incomesdataresearch.com or Ken Mulkearn on 07392 018997 kenmulkearn@incomesdataresearch.com.