Pay awards felt the squeeze in the three months to July, coming in at a median of 3%, down from 3.4%, the lowest they have been since December 2021, according to latest monitoring figures from Incomes Data Research (IDR).
Pay awards
Pay awards show return of employer restraint
The research body argued the downward shift was the result of fewer employers paying high-end increases, or awards worth 4% or more.
Less than one in 10 awards (9%) were worth 4% or more, down “significantly” from the 39% reported in June, IDR said.
The latest data adds to what is a pretty challenging picture for pay right now. Research from Brightmine, for example, has suggested that four in five employees received a smaller pay award in 2025 than in the previous year, and that sentiment among employers remains ‘cautious’ amid ongoing economic uncertainty.
The largest cluster of awards – more than half, at 53% – occurred in the 3% to 3.99% bracket and this proportion was up from 35% last month, IDR added.
The figures are based on a sample of 32 awards from across the whole economy effective between 1 May and 31 July, mostly at large organisations and together covering 683,512 workers in total.
However, very few awards in the sample were from the public sector and not-for-profit, said IDR, and therefore the results predominantly reflected the picture in the private sector. Here, the median also fell from 3.4% to 3.0%.
In all, just 7% of all private sector awards in the three months to July were worth 4% or more, down from a proportion of 38% in June.
More than half (54%) of awards were worth 3% to 3.99% (up from 37% last month), with this range most common within construction, financial services and hospitality.
However, IDR cautioned that the change in the median was largely because of timing, as its latest analysis did not include awards effective in April, which were influenced by the National Living Wage (NLW) uplift of 6.7%. As a result, the median pay award in the three months to April was higher (at 3.5%) than it is now.
“April is by far the most popular month for pay setting, so the latest median is somewhat less representative of the overall landscape than trends established earlier in the year,” said Zoe Woolacott from IDR.
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