Private sector median pay increases remain at 3.5%

The median pay award for the private sector remained at 3.5% in the three months to March 2025, after falling to 3.5% from 4% in the three months to February, according to Incomes Data Research (IDR).

Its latest pay settlement figures are based on a sample of 93 pay awards between 1 January and 30 March, mainly at large organisations and covering more than 720,000 employees.

The median for the whole economy held at 3.2% in March. The proportion of private sector pay rises worth between 3% and 3.99% grew from 39% in February to 45% in the latest analysis period, sustaining the median. Awards in this bracket occurred in various industries, including financial services and retail.

The upper quartile of pay awards in the private sector fell from 4.3% to 4% due to a smaller proportion worth 4% or more. Just over a third (36%) of awards were in the upper quartile, compared to 45% in February. Outcomes in private services contributed to this, with the median falling from 3.5% to 3.2%.

The median pay increase in manufacturing remained at 3.5%, while the outcomes in manufacturing and production remain unchanged since February. The upper quartile fell from 4.3% to 4% due to a smaller proportion of awards worth 4% or more, at 38%, down from 45% in February.

Awards worth at least 4% continued in construction and engineering. Meanwhile, the median pay award in the not-for-profit sector was 3%, and although this were a minority of the overall sample outcomes, this helped keep the median at 3.2% for the wider economy below that of the private sector.

Zoe Woolacott, senior researcher at IDR, said: “Higher-end awards worth 6% or more will become more common in April due to the influence of the 6.7% uplift in the national living wage, which brought the minimum hourly rate of pay for workers aged 21 and over to £12.21 and impacts workers in the low-paying sectors such as care, hospitality and retail.”

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