Pay awards are continuing to stagnate, and lagged behind inflation in the three months to August, according to latest data.
The statistics from Brightmine show the median basic pay award holding at 3% for the three months to August, despite inflation remaining stable at 3.8%.
Pay awards
Pay awards feeling tightest squeeze since December 2021
This was the eighth consecutive rolling quarter recording a median award of 3%, Brightmine said, marking the longest period of stability since 2019.
The squeeze on pay is coinciding with both CPI and RPI inflation measures reaching their highest levels in more than a year.
Analysts are warning of sluggish growth, uncertainty over tax rises, and a difficult run-up to the autumn Budget, Brightmine said.
As well as pay stagnating, the jobs’ market remains intensely challenging, with many organisations delaying hiring or holding vacancies open. Employment edged up to 75.2% between May and July, while unemployment slipped to 4.7%.
Against the backdrop of increased employer National Insurance Contributions, high operating costs and volatile market conditions, many organisations have opted for restrained pay awards this year after reaching a peak of 6% in 2023, Brightmine also pointed out.
Sheila Attwood, the company’s HR insights and data lead, said: “Pay awards have remained remarkably stable throughout 2025, with the median stuck at 3% 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,” she added.
Drilling down into the data, almost a third of pay awards (32.1%) were clustered at the 3% marked. A further quarter (25%) of settlements fell just below, between 2% and 2.99%.
More than half (52.9%) of pay deals were lower than those agreed in 2024. Just under a quarter (23.5%) matched last year’s level, while 14.7% received higher settlements.
Around one in 10 settlements (10.7%) in the three months to August 2025 resulted in a pay freeze, following no freezes recorded in the previous rolling quarter.
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