Four in five UK employees received smaller pay rises in 2025 than 2024, as data shows that pay increases remained at 3 percent for the seventh consecutive rolling quarter.
Pay data for the three months to June 2025 revealed that the majority of pay rises were below increases in inflation, while pay deals for the same quarter in 2024 were 4.8 percent. These figures show how pay deals have shifted in just 12 months, according to the research from HR data and insights provider Brightmine.
The data indicates that wage stagnation has taken hold as the UK economy faces turbulence.
Gross domestic product (GDP) dipped by 0.1 percent in May, marking a second month of contraction, and the Bank of England held the base rate at 4.25 percent in June. Commentators suggest there may be a cut in the base interest rate in August, but the BoE’s Monetary Policy Committee stated any change will depend on evolving conditions. Signs of a less robust UK economy come as the Labour government concluded its first year in office.
Pay rise data
Just one in 20 pay rises were higher than 2024, and the remaining 13.9 percent remained the same.
The most common basic pay award is 3 percent, agreed in 19.7 percent of the deals analysed in three months to June 2025. The second most common pay award is 2 percent, which is the value of around one in seven basic awards.
The provider highlighted further labour market weakening, indicated by falling vacancy numbers and a decline in payrolled employees. The Office for Budget Responsibility forecasts that inflation will not reach the BoE’s 2 percent target until the second quarter of 2026, with the provider saying this suggests further real-terms pay pressure might lie ahead.
Sector gap widens
Public sector pay rises remain ahead of those in the private sector as the data reveals a growing divide between the two. In the 12 months to the end of June 2025, the median public-sector pay award was 4.3 percent, while in the private sector it was 3 percent. This gap of 1.3 percentage points has widened significantly from just 0.4 points the year before.
Both sectors have seen a drop in median award levels year-on-year, but public-sector deals have been more resilient. The provider said that notable settlements include a 4.5 percent rise for the armed forces and 4 percent for doctors and dentists, which has bolstered the overall median.
However, resident doctors plan to strike later this month after being awarded a 5.4 percent uplift. The offer was rejected by the British Medical Association, which is calling for a 29 percent increase in addition to last year’s average 8 percent rise.
“After a period of historically high settlements in response to inflation, we’re now seeing the return of employer pay restraint,” said Sheila Attwood, HR insights and data lead at Brightmine. “While 3 percent is consistent, it’s also stagnant, and real-terms pay erosion is starting to reappear for many, meaning many workers are actually worse off this year compared to inflation.”
She added: “Higher public-sector awards have helped keep the median up, but disputes like the junior doctors’ strike show the government is far from out of the woods. One year in, Labour faces growing pressure to balance fiscal restraint with rising pay demands across critical services — and that tension is only set to intensify.”
The provider’s data is based on 195 pay deals between 1 April and 30 June 2025, covering the pay review outcomes for more than 2.5 million UK employees.
