UK pay rises continue to lag inflation as analysis shows the median basic award stayed put at 3 percent for the three months to August 2025. For the same period inflation was 3.8 percent.
The analysis, from insight provider Brightmine, reveals that pay awards have now remained at 3 percent for eight consecutive rolling quarters. This is the longest period of wage stasis since 2019. The provider said this reflects how organisations have adjusted to external pressures in recent years, including the pandemic, the cost-of-living crisis and record-high inflation.
The 2025 bargaining year has been marked by “moderation”, with the whole-economy median standing at 3 percent, compared with 4.9 percent in the year to August 2024 and 6 percent in the year to August 2023.
More than half (52.9 percent) of pay deals were lower than those agreed in 2024, while just under a quarter (23.5 percent) matched last year’s level and 14.7 percent of employers gave out higher settlements. Pay freezes have also returned, with one in 10 organisations reporting no increase during the latest quarter.
Employers continue to cluster around modest levels of increase, with almost a third of awards set at 3 percent and a further quarter falling between 2 percent and 2.99 percent. Brightmine said this reflects a combination of rising operating costs, increased employer national insurance and market uncertainty. After two years of stronger settlements, which peaked at a median of 6 percent in 2023, many organisations are exercising caution.
Inflationary pressures remain despite the Bank of England’s interest rate cut to 4 percent. With both CPI and RPI hitting their highest levels in over a year, the wider economic picture has done little to support higher pay. awards.
Recruitment activity has also slowed, with organisations holding vacancies open or delaying hiring. Employment edged up to 75.2 percent between May and July, while unemployment slipped to 4.7 percent.
Sheila Attwood, HR insights and data lead at Brightmine, said: “Pay awards have remained remarkably stable throughout 2025, with the median stuck at 3 percent across successive quarters. This level of stability has not been seen since before the pandemic, as the influence of strong external factors dissipates. However, with inflation still elevated and recruitment slowing, employers remain cautious in their approach to pay, balancing workforce needs against ongoing economic uncertainty.”
This analysis covered 34 pay awards taking effect between May and August 2025, representing more than 600,000 employees.
