Around a third of pay increases are worth 4% or more
Press Release September 2026
Nealy a third (32%) of pay rises were worth at least 4% in the three months to July 2026, according to the latest monitoring figures from Incomes Data Research (IDR). At the same time however, the median pay award across the economy fell from 3.5% to 3.3%. This is the first time the median has dipped below 3.5% since December 2025, when it was 3.0%. The interquartile range of awards remains between 3.0% and 4.0% as the largest cluster of awards – 54% – continues to occur in the 3% to 3.99% bracket (up from 49% last month).
Closer analysis of awards in the 3% to 3.99% bracket reveals that the proportion of pay increases worth between 3% and 3.49% grew from 28% last month to 67% in the three months to July and this is likely to have influenced the fall in the median from 3.5% to 3.3%. This change has been driven by outcomes in private services where the median fell from 3.4% in June to 3.0% in the latest period. The change in the private services median is largely due to timing, as the latest analysis does not include awards effective in April, which were influenced by the National Living Wage (NLW) uplift of 4.1%. As a result, the median pay award in private services in the three months to April was higher (at 3.5%) than it is now.
“April is by far the most popular month for pay setting so the latest median is somewhat less representative of the overall landscape than trends established earlier in the year,” commented Zoe Woolacott from IDR.
Very few awards in the sample for the three months to July are from the public sector and not-for-profit area and therefore the results predominantly reflect the picture in the private sector, where the median also fell (from 3.5% to 3.2%). Within the private sector there is a different picture for pay between manufacturing and private services.
In manufacturing, the proportion of higher-end pay rises worth 6% or more doubled from 4% in June to 8% in July, while the proportion of increases worth between 4% and 4.99% also grew: nearly three-fifths (58%) of awards were in this range in the three months to July, compared to 27% in June. These changes pushed the median in manufacturing up from 3.5% to 4.0% and the upper quartile of awards also rose (from 4.0% to 4.3%). This is a relatively quiet period for pay setting in manufacturing and production, with pay reviews in this sector more common in winter. Our sample for the three months to July is largely based on deals in production, such as in construction and energy and water.
In private services, the median fell from 3.4% to 3.0% and the upper quartile is down significantly from 4.0% to 3.0%. The difference in the figures for July, compared to those last month, is a result of a clustering of awards between 3% and 3.99%. Nearly three-quarters (73%) of pay rises in the sector were worth between 3% and 3.99% and the remaining outcomes (27%) occurred in the 2% to 2.99% bracket (up from proportions of 41% and 20% respectively in June). No private services awards in our latest sample are worth 4% or more.
The latest pay settlement figures are based on a sample of 28 awards from across the whole economy effective between 1 May and 31 July 2026, mostly at large organisations and together covering 585,505 workers in total.
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.