The median pay increase in the private sector has increased to 3.5% from 3.4% in the three months to May 2025, according to Incomes Data Research (IDR).
Its latest pay settlement figures are based on a sample of 178 awards from across the economy between 1 March and 31 May, covering more than 3.3 million workers mostly at large organisations.
This was after a fall from 3.5% to 3.4% in the three months to April. The change has been influenced by outcomes in private services because of a larger proportion of increases worth 6% or more, at 19% compared to 12% in April.
Increases at this level were common in hospitality and retail, while manufacturing and production outcomes are largely unchanged since April, with the median holding at 3.5%.
The median pay increase across the economy rose from 3.2% to 3.4% in the three months to May. This is due to the uplift in the national living wage (NLW).
The proportion of pay rises worth 6% or more grew from 12% in April to 15% in the latest analysis period as a result of the NLW, which rose by 6.7% to £12.21 on 1 April. This has impacted several pay reviews in the private sector, particularly those in low-paying areas such as hospitality and retail, with the median at 3.5%.
The median pay award in the public sector was 3.6%. Most of this year’s recommended pay rises for public sector workers have been accepted by the government. Six of the eight independent pay review bodies have submitted their reports, with recommendations for increases ranging between 3.6% for NHS staff to 4.5% for the armed forces.
Zoe Woolacott, senior pay researcher at IDR, said: “The national living wage has a less direct impact in manufacturing, compared to private services. However, manufacturing employers still face pressures to offer competitive rates of pay in order to recruit and retain staff.”
