Median pay award drops to 4.5%

The median basic pay award for the quarter from May to July this year has fallen to 4.5%, according to new figures.

Research from HR data and insights provider Brightmine – formerly XpertHR – revealed that in the three-month period, awards dropped from the revised 5% reported in the previous three rolling quarters to match the lowest level seen so far in 2024.

The data also showed that this year, most pay deals are lower than the settlements the same group of employees achieved in 2023, with nearly three-quarters (73.1%) now worth less than they were then. The analysis further found only 7.7% of deals in 2024 are worth more.

In contrast, pay awards in the public sector have reached 6.1% in 12 months to the end of July, after Chancellor Rachel Reeves approved a 5.5% salary increase for these workers, meaning they have achieved awards of 1.1% more than those in the private sector over the same period.

However, pay awards in general are expected to remain slow despite a slight growth in inflation, with pay settlements predicted to decline further in 2025 compared to the previous two years.

Sheila Attwood, Brightmine senior content manager, data and HR insights, said: “Our measure of pay awards has fallen to its lowest level since March this year, the first sign that increases may be about to take another step downwards following the fall from the 6% seen in 2023.

“Employers that have made pay awards so far this year have already reacted to the falling inflation environment by putting in place lower pay awards than made last year. This practice is likely to continue among those concluding deals later in the year, with this group also looking like they will agree increases at a lower level than those seen in the year so far.”

The research, which was based on 48 pay settlements covering 743,755 UK employees, also discovered that the most common basic award was worth 5%, accounting for nearly three in 10 (29.8%) awards, while nearly double that percentage (57.4%) are worth between 4% and 5%.

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