Private sector median pay increase holds steady at 4.0%
Press Release March 2025
The median pay increase in the private sector held steady at 4.0% in the three months to January 2025, according to the latest monitoring figures from Incomes Data Research (IDR). The proportion of private sector pay rises worth 5% or more grew from 14% in December to 17% in the latest analysis period and this pushed the upper quartile of awards up from 4.0% to 4.5%. These changes are mainly influenced by outcomes in manufacturing, where the upper quartile is also 4.5% (up from 4.3%). January is a key month for deals in the manufacturing sector.
Our analysis of pay outcomes for the whole economy reveals a median of 3.5%, half a percentage point lower than that in the private sector. This latest figure marks a fall in the median, which held steady at 4.0% for the latter half of 2024 (see chart below) and is the first time the median has dipped below 4.0% since March 2022 when it was showing at 3.8%.
The recent fall in the median – from 4.0% in December to 3.5% in January – has been influenced by a smaller proportion of pay rises worth between 4% and 4.99%. Less than a third (31%) of increases were at this level, down from around two-fifths (39%) in December. At the same time the proportion of pay awards in the 3% to 3.99% bracket has grown to just over two-fifths (41%), up from exactly a third (33%).
Pay awards in the three months to January 2025 are generally higher than the current rate of CPI inflation (3.0% in the year to January 2025) and the recent rise in inflation could soon exert upward pressure on pay. Another pressure comes from the National Living Wage (NLW), which is set to rise by 6.7% in April – a key month for pay reviews. This uplift will bring the statutory minimum rate for adult workers aged 21 and over to £12.21 per hour and will also impact pay awards at those firms where most employees are either on the statutory floor or are paid just above it.
“The whole economy median may rise again by April due to the influence of the forthcoming uplift in the NLW and the uptick in inflation could also play a role. Wage rises tend to lag behind inflation, and so the former may eventually follow the upward trend in the latter, depending on the extent of any rise in inflation,” commented Zoe Woolacott from IDR.
The latest pay settlement figures are based on a sample of 68 awards effective between 1 November 2024 and 31 January 2025, mostly at large organisations and together covering nearly 300,000 employees. Very few awards in the sample are from the public sector and therefore the results predominantly reflect the picture in the private sector. The median pay award in the not-for-profit sector is comparatively low at just 3.0% and outcomes in this area – although a minority of the overall sample – have helped bring down the median for the wider economy below that for the private sector.
Note for Editors
Incomes Data Research (IDR) monitors pay reviews across the economy throughout the year and publishes findings in ‘Pay Climate’, our quarterly e-bulletin, with additional monthly updates on our website: https://www.incomesdataresearch.co.uk/.
Our data is used by all those concerned with decisions on pay, including employers in the private and public sectors, government bodies, trade unions and economists. We have conducted research for a wide range of clients including the Low Pay Commission and the Office of Manpower Economics, as well as for a range of employers and employee representative organisations.
For any queries relating to this research please contact Zoe Woolacott (01702 669549 /zoewoolacott@incomesdataresearch.com) or Ken Mulkearn (07392 018997/ kenmulkearn@incomesdataresearch.com).