Pay awards have remained stable in the first quarter of 2025, with the median pay award remaining at 3% for the fourth consecutive rolling quarter.
Despite the recent increase in national insurance contributions, data from HR data and insights provider Brightmine, indicates that a sharp drop in pay awards is unlikely in the near term.
Sheila Attwood, HR insights and data lead at Brightmine, said: “Currently, the data isn’t showing any signs of a knee-jerk reaction to recent national insurance changes. However, we do know that employers are taking a watch and wait approach, so we expect to see that reflected in the second half of this year.
“The good news is that the latest GDP figures show stronger-than-expected growth of 0.5% in February, offering some reassurance for businesses. However, global uncertainty – particularly around the actions of the US government – continues to cloud the outlook. These two factors confirm our view that pay awards levels will remain steady in the near future.”
April is the most significant month in the pay review calendar, with almost half of all annual pay settlements taking effect during this period. Early indications from the first April 2025 pay deals suggest that the overall pattern is holding firm. The median basic pay award in April stands at 3%, with the middle half of deals ranging between 2% and 3.5%. Notably, 75.5% of these settlements were lower than the award given at the previous review for the same group of employees, Brightmine’s data revealed.
“This early snapshot confirms what we’ve been seeing over recent months – most organisations are holding the line at 3%,” added Attwood. “While we are seeing more pay awards at the lower end, the overall picture remains one of stability, particularly as inflation eases and NIC changes bed in.”
Brightmine collected details of 125 pay awards that took effect between 1 January and 31 March 2025, covering the pay review outcomes for more than 192,000 employees. It found:
- A narrowing in the range of pay awards. Pay awards are heavily bunched around the median value, with the middle 50% of pay awards sitting between 2.5% and 3.5%.
- Few organisations are freezing pay. There are a handful of pay freezes – from four organisations – recorded in the latest data, showing that while settlement levels have fallen, organisations for the most part are still offering pay rises.
- There is a heavy focus on 3%. Almost one-third (31%) of pay awards were worth exactly 3%, with a total of 58.4% worth between 2% and 3%.
- Three-quarters of deals were lower this year. Based on a matched sample analysis, 72.7% of pay awards in the current rolling quarter are worth less than the same group of employees received at their previous review. Just 15.5% were higher compared with a year ago, with the remaining 11.8% at the same level two years in a row.
- All-deals median at 3%. Analysing the full data sample of both performance-related and basic pay awards also produces a median 3% pay award over the past three months.
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