Four in five employees received a smaller pay award in 2025 than in the previous year, according to the latest data from Brightmine.
In a matched analysis, 81.2% of deals were lower than those provided to the same employee group in 2024.
Only one in 20 pay rises were higher than 2024, and 13.9% were the same.
The median pay award in the three months to June stood at 3% for the seventh consecutive rolling quarter.
The same period in 2024 recorded a median award of 4.8%, showing how the pay settlement landscape has changed within the last 12 months.
HR insights and data lead Sheila Attwood described the current lack of movement in pay awards as “real-terms pay erosion”.
“After a period of historically high settlements in response to inflation, we’re now seeing the return of employer pay restraint,” she said.
“While 3% is consistent, it’s also stagnant, and real-terms pay erosion is starting to reappear for many, meaning many workers are actually worse off this year compared to inflation.”
The latest pay award figures come as the UK marks a year under a new Labour government.
UK GDP fell by 0.1% in May, the second month it decreased, and inflation is not set to reach the Bank of England’s 2% target until next year.
And while the median public sector pay award in the 12 months to June 2025 was higher than the private sector at 4.3%, industrial unrest remains.
Resident doctors, members of the British Medical Association, are set to strike later this week, calling for a 29% pay rise, while other trade unions are currently consulting members on whether to enter pay disputes.
These factors all mean more real-terms pay pressure lies ahead, according to Brightmine. Attwood added: “Higher public-sector awards have helped keep the median up, but disputes like the junior doctors’ strike show the government is far from out of the woods.
“One year in, Labour faces growing pressure to balance fiscal restraint with rising pay demands across critical services — and that tension is only set to intensify.”
One in five basic pay awards in the year to June 2025 were 3%, and the second most common was 2%, which was the value of around one in seven awards.
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