Private sector median rises to 3.4%
Press Release December 2025
The median pay award across the private sector rose from 3.0% to 3.4% in the three months to October 2025, according to the latest monitoring figures from Incomes Data Research (IDR). The proportion of increases worth between 4.0% or more in the sector grew from nearly a quarter (23%) in the three months to September to around a third (31%) this time. This change was mainly influenced by outcomes in private services, although outcomes in manufacturing and production also played a part.
“The uptick in the median is an indication that cost of living pressures continue to persist, even as the rate of inflation comes down. The path of both will be important determinants of pay outcomes in 2026”, commented Zoe Woolacott from IDR.
Our analysis of pay outcomes for the whole economy reveals a higher median of 3.7%, 0.3 percentage points higher than that in the private sector. In our latest sample, the proportion of increases worth 4% or more grew from 35% to 46% across the economy as a whole. While this has been influenced in part by the private sector, outcomes in the public sector are the main driver for this change. The median here continues to sit above those for both the whole economy and the private sector, at 4.1%.
This elevated median (of 3.7%) for October is higher than the median for 2025 as a whole, 3.3%. Early indications for 2026 show that the median is broadly in line with or perhaps a little higher than this (see below).
Private services versus manufacturing and production
There are differences within the private sector. The median pay award in private services rose from 3.0% to 3.2% with the largest cluster of awards continuing to occur in the 3% to 3.99% bracket (63% of awards were at this level in the three months to October, compared to 44% in September). There was a significant change in the 4%-plus bracket. Some 25% of pay rises in private services were worth 4% or more in our latest analysis, compared to just 8% of awards in September. With small samples of pay awards at this time of year, the inclusion of one or two higher (or lower) increases can have an impact on the figures. One such example this time is the 4.1% pay rise for offshore catering workers under the Caterers Offshore Trade Association (COTA) agreement.
Analysis of awards in manufacturing reveals a different picture. Here the median remains higher than in private services at 3.7% but this represents a slight fall since September when the median was 3.8%, mostly due to there being fewer awards at 4% or above in the current period. The proportion of high-end awards worth 4% or more fell from 44% to 40%. However, as with pay setting generally, this is a relatively quiet period for manufacturing awards, which typically dominate the start of the year.
Public sector
In contrast to the private sector, the median in the public sector rose from 4.0% to 4.1%. This is due to a number of higher-level rises worth 4% or above for thousands of public sector workers this year. The public sector median has been equal to, or higher than, the private sector median throughout 2024 and 2025. This reflects the cycle of pay between the two sectors, with the former currently in the ‘catching-up’ phase, after a lengthy period in which pay awards lagged behind those in the latter. In addition, many of the public sector awards were decided earlier when the backdrop – notably in respect of inflation – was markedly different.
The latest pay settlement figures are based on a sample of 26 pay awards effective between 1 August and 31 October 2025, covering over 800,000 employees in total.
What will happen to the median in 2026?
Separate analysis by IDR of 19 already-agreed pay deals for 2026, as part of the company’s ongoing monitoring of pay rises across the economy, reveals a median pay award of 3.5%. This is higher than that for 2025 when the median for the year as a whole was 3.3%. An important influence on pay outcomes will be the forthcoming 4.1% uplift in the National Living Wage, which will bring the minimum hourly rate of pay for workers aged 21 and over to £12.71. The path of inflation and the labour market will play a role too.
We are currently conducting research on pay intentions for 2026 by asking employers about their plans for next year, which we will be writing about and sharing in future press releases.
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 (01702 669549 /zoewoolacott@incomesdataresearch.com) or Ken Mulkearn (07392 018997/ kenmulkearn@incomesdataresearch.com).