The median pay increase in the private sector fell to 3.5% from 4% in the three months to February 2025, according to Incomes Data Research (IDR).
Its latest pay settlement figures are based on a sample of 75 awards, which covered more than 230,000 employees in predominantly large organisations, between 1 December 2024 and 28 February 2025.
The proportion of private sector pay rises worth 4% or more fell from 52% in January to 45%, which caused the upper quartile of awards to dip to 4.3% from 4.5%. IDR found that this was influenced by changes in private services and manufacturing, with the median pay award at 3.5% in each of these sectors, down from 4% and 3.7% in January, respectively.
The decrease in pay rises has contributed to a lower median figure across the whole economy, falling from 3.5% in January to 3.2% in February, which is lower than the private sector figure of 3.5% in February. This has been influenced by a smaller proportion of higher-end awards worth 4% or more, with 41% of increases at this level, down from 46% in January.
The median pay award in the not-for-profit sector was 3%, with changes in this sector bringing down the median for the wider economy below that of the private sector.
According to IDR, the latest figures show that the whole economy median pay award held steady at 4% for the last half of 2024. The last time it was at this level was in the three months to February 2022.
Zoe Woolacott, senior pay researcher at IDR, said: “The whole economy median may rise again in April due to the influence of the forthcoming uplift in the national living wage 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.”
