Median pay award at lowest level since 2021
Press Release September 2025
The median pay award across the economy fell from 3.4% to 3.0% in the three months to July 2025, according to the latest monitoring figures from Incomes Data Research (IDR). This is the first time the median has been at this level – 3.0% – since December 2021. This change has been influenced by a downward shift in the distribution of awards with fewer employers paying high-end increases worth 4% or more. Less than one-in-ten (9%) of awards were worth 4% or more, which is down significantly from 39% in June. The largest cluster of awards – 53% – occurred in the 3% to 3.99% bracket and this proportion is up from 35% last month.
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 3.4% to 3.0%). Just 7% of all private sector awards in the three months to July were worth 4% or more and this is down from a proportion of 38% in June. Over half (54%) of awards were worth 3% to 3.99% (up from 37% last month). Pay rises between 3.0% and 3.99% have occurred most commonly in construction, financial services and hospitality. The change in the 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 6.7%. As a result, the median pay award 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.
The latest pay settlement figures are based on a sample of 32 awards from across the whole economy effective between 1 May and 31 July 2025, mostly at large organisations and together covering 683,512 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 Manpower Economics, 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 (01702 669549 /zoewoolacott@incomesdataresearch.com) or Ken Mulkearn (07392 018997/ kenmulkearn@incomesdataresearch.com).