New data shows that 81 percent of UK employees have received smaller pay awards so far in 2025 compared to last year. For the seventh consecutive rolling quarter, median basic pay awards remain at 3 percent, marking a continued trend of wage restraint across the UK workforce.
That’s according to findings by global data provider Brightmine, released as the UK marks the first anniversary of a Labour Government under fragile economic conditions.
“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.”
GDP contracted by 0.1 percent in May, following an earlier contraction the previous month. The Bank of England kept interest rates on hold at 4.25 percent in June, with a potential rate cut suggested for August, pending further economic developments.
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The Office for Budget Responsibility has forecast that inflation will not return to the Bank’s 2 percent target until the second quarter of 2026. With falling vacancy numbers and a decline in payrolled employees, labour market conditions remain subdued, placing continued pressure on real-terms earnings.
Public sector pay continues to outpace private sector
Brightmine’s analysis, based on 195 pay awards between April and June 2025 covering over 2.5 million UK employees, also reveals a widening gap between public and private sector settlements. In the 12 months to the end of June, the median public-sector pay award stood at 4.3 percent, compared to 3 percent in the private sector – a gap of 1.3 percentage points, up from 0.4 points a year earlier.
While pay growth has slowed across both sectors, public sector settlements have proven more resilient. Notable examples include a 4.5 percent rise for the armed forces and 4 percent for doctors and dentists, contributing to the sector’s higher median.
Despite this, industrial action continues. Junior doctors are expected to strike again later this month, having rejected a 5.4 percent rise. The British Medical Association is calling for a 29 percent increase on top of last year’s average 8 percent uplift.
Attwood 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.”
Pay restraint reflected across all sectors
The current quarter’s figures show no change in the overall median award, which remains at 3 percent. This compares to a 4.8 percent median in the same quarter last year, highlighting the scale of the drop in wage growth over the past 12 months.
Matched sample analysis shows that 81.2 percent of 2025 pay deals were lower than the corresponding award made to the same employee group in 2024. Only 4.8 percent of pay rises exceeded last year’s figure, while 13.9 percent remained the same.
The most common basic award remains at 3 percent, accounting for 19.7 percent of all settlements recorded. The next most frequent award level is 2 percent, which appears in around one in seven deals.
Across both basic and performance-based awards, the overall median remains in line with the headline figure of 3 percent. The data suggests a consistent picture of wage restraint across the UK, as organisations respond to economic uncertainty and weak productivity growth.
With inflation forecast to remain above target into 2026 and public sector disputes ongoing, pay pressures are expected to persist. HR professionals are likely to face continued challenges in balancing employee expectations with organisational cost constraints in the months ahead.
