More than two-fifths (44%) of employers said they expect pay to grow at the same rate in 2026 as it did in 2025, according to new research from Incomes Data Research (IDR).
The findings are from its latest poll of employers’ pay intentions for the coming year, which received responses from 121 organisations and indications on pay from 89 employers who are yet to decide their 2026 pay award.
More than a quarter (28%) of respondents said the level of pay rise this year is likely to be higher than in 2025, while 28% anticipate that it will be lower.
Affordability is a key concern for employers’ pay decisions for the coming year, with 96% reporting that this has had, or will have, a bearing on pay outcomes this year. Inflation is also an influential factor for 65%, which is up from 60% at the end of 2024.
More than three-fifths of pay awards are likely to fall between 3% and 3.99%. The largest proportion of the 89 employers yet to decide their pay award think it is likely to be worth between 3% and 3.49%, with 39% anticipating that they will award a pay rise at this level.
One-fifth (22%) forecast the pay rise for their main staff group to be in the region of 3.5% to 3.99%, while 11% feel it will be worth 4% or more.
Zoe Woolacott, senior pay researcher from IDR, said: “Inflation is currently higher than it was a year ago and this has applied upward pressure on pay to some extent and the findings from our poll show that inflation continues to figure relatively highly in employers’ concerns.”
IDR also analysed 75 pay deals that have been agreed for 2026. The median pay award for 2026 is 3.4%, higher than 3.3% in 2025. A quarter (26%) of pay increases will be worth 4% or more this year, while 52% are worth between 3% and 3.99%.
