Employers set to award pay increases of between 3% and 3.99% next year

Press Release September 2026

Most employers expect that pay will grow at much the same rate next year as it has done so in 2026, according to the findings of IDR’s latest survey of employers’ pay and reward intentions for 2027. Almost three-quarters (72%) of survey participants anticipate that their 2027 pay rise is likely to be at the same level as this year’s, although a further 18% are forecasting a slightly lower increase. Building further on a trend seen last year, the greatest proportion – 60% – of anticipated 2027 pay increases are in the 3% to 3.99% bracket, with the majority of these (half of all expected pay rises) falling between 3% and 3.49%. 

As with IDR’s equivalent surveys in previous years, affordability remains a key concern for participants, with 97% reporting that this will have a bearing on the level of pay increases in 2027. The future business outlook is also an influential factor for 82% of organisations. Meanwhile changes to the ‘going rate’, market benchmarking, and inflation have all increased in significance compared to IDR’s last survey. Almost three-quarters (74%) of respondents cite changes to the ‘going rate’ as an influential factor, up from 65% last year, and 77% of organisations anticipate that market benchmarking will have a role in pay setting, up from 70% in 2026. Meanwhile 76% of survey participants say that the rate of inflation will influence pay decisions, compared with 69% last year. ‘This is likely because inflation has increased and is expected to increase further in the light of events in the Middle East, and perhaps also in response to the recent drought conditions,’ said Katherine Gomez of IDR.

Over two-fifths (42%) of respondents to IDR’s survey anticipate that the greatest pressure when looking at next year’s pay round will likely come from cost-of-living considerations. However, for over a fifth (23%) of respondents, pressure in the opposite direction, from boards to reduce wage costs, is likely to be the most influential factor.

Note for Editors

Incomes Data Research conducted its ‘Planning for pay in 2027’ survey in the summer of 2026. The survey gathered responses from 95 organisations across the UK. The 95 participants together employ more than 1.1 million staff, with a median headcount of 2,500 people. Some 59% of responses came from the private services sector, a further 21% from manufacturing and production, 15% from not-for-profit organisations and 5% from the public sector. Around two-fifths (41%) of these employers recognise a trade union for some groups of staff and a further 7% do so for all UK employees.

Incomes Data Research also 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.

For any queries relating to this research please contact Ken Mulkearn (07392 018997/ kenmulkearn@incomesdataresearch.com) or Katherine Gomez (katherinegomez@incomesdataresearch.com).