Salaries in the U.K. remain at a 3% increase, despite the dismal economic conditions in April.
In the first quarter of 2025, pay settlements across the UK have maintained a steady trend, with the median basic pay award remaining at 3%. This consistency has been observed for six consecutive quarters, according to data from Brightmine, which covers 136 pay awards affecting more than 309,000 employees between 1 February and 30 April 2025.
Early indications suggest that public sector pay awards in 2025 will be more closely aligned with private sector norms. However, as of April 2025, public sector pay awards continue to be higher than those in the private sector, maintaining a pay differential between the two sectors.
The latest economic data shows signs of growth, but underlying economic fragility may be masked. The UK economy grew by 0.7% in the first quarter of 2025, but pay outcomes have not yet reflected this growth.
In terms of pay growth, the average weekly total pay (including bonuses) increased by 4.9% in the private sector and 5.3% in the public sector in the three months to April 2025 compared with the year before. When adjusted for inflation, the public sector saw a higher annual regular earnings growth rate of about 5.5%, compared to 4.9% in the private sector for March to May 2025.
After adjusting for inflation (using CPIH), real-terms pay growth was around 1.1% for regular pay and about 1.0% for total pay across Great Britain, showing modest but positive real wage increases.
Despite the stability in UK pay settlements, the data suggests a subdued pattern, indicating potential for the headline median to fall in the months ahead. Approximately one in 20 deals in the latest quarter are pay freezes (5.1%).
The majority of pay deals in 2025 are lower than the 2024 award (78.1%). The most common pay award in the dataset is for a 3% increase, followed by a 2% pay rise. The median of all pay deals stands at 3%, indicating consistent pay budgets regardless of how awards are structured.
Sheila Attwood, HR Insights and Data Lead at Brightmine, suggests that many employers are approaching wage decisions with caution due to ongoing cost pressures. Sheila also expects public sector pay awards to mirror the more restrained approach seen in the wider economy.
The median basic pay award in the three months to the end of April 2025 remains at 3%, but almost half of all awards now fall below this mark. The gap between public and private sector pay awards is set to narrow, with the private sector median at 3% and the public sector median at 5%.
Cost pressures persist for both employers and households, with April bringing increases in council tax, utility bills, and National Insurance contributions. The latest figures are crucial in setting the tone for pay deals throughout the year.
In summary, while the UK economy is showing signs of growth, pay settlements remain steady at a median 3%, with the public sector consistently achieving somewhat higher pay growth compared to the private sector. This sustains a public vs private sector pay gap in favour of public sector workers by several tenths of a percent in annual pay growth rates. The overall earnings growth remains positive after inflation adjustments but at a moderate pace.
Finance professionals in the UK are closely monitoring the pay settlement trends, as public sector pay awards continue to surpass private sector norms in terms of annual growth, even though the median basic pay award is still at 3%. The distinct business strategy observed in the public sector relative to the private sector may be a reflection of different budgeting approaches and cost pressures.
