New analysis from Brightmine, the HR data and insights provider, shows that UK pay awards remain static, with the median basic pay award holding at 3% for the three months to August 2025, despite inflation remaining stable at 3.8%.
The eight consecutive rolling quarters recording a median pay award of 3% marks the longest period of stability since 2019 – demonstrating the impact that the covid pandemic, cost-of-living crisis and record-high inflation have had on organisations’ pay review decisions since then.
Challenging economic backdrop
The UK economy remains under strain despite the Bank of England’s recent interest rate cut to 4%. Inflationary pressures have persisted, with CPI and RPI both reaching their highest levels in over a year. Analysts warn of sluggish growth, uncertainty over tax rises, and a difficult run-up to the autumn Budget.
Recruitment activity has softened, with many organisations delaying hiring or holding vacancies open. Employment edged up to 75.2% between May and July, while unemployment slipped to 4.7%.
A look back at a restrained year
The year 2025 has presented significant challenges for organisations, driven by financial pressures from increased employer National Insurance Contributions, high operating costs and volatile market conditions. Many organisations have opted for restrained pay awards, likely feeling the impact of higher awards in the previous two years, which peaked at a median of 6% in 2023.
The bargaining year from September 2024 to August 2025 has been marked by moderation. The whole economy median stands at 3% - down from 4.9% in the year to August 2024 and 6% in the year to August 2023.
Sheila Attwood, HR Insights and Data Lead at Brightmine, comments: “Pay awards have remained remarkably stable throughout 2025, with the median stuck at 3% across successive quarters. This level of stability has not been seen since before the pandemic, as the influence of strong external factors dissipates. However, with inflation still elevated and recruitment slowing, employers remain cautious in their approach to pay, balancing workforce needs against ongoing economic uncertainty.”
Brightmine August 2025 Pay Trends Highlights
Brightmine collected details of 34 pay awards that took effect between 1 May and 31 August 2025, covering the pay review outcomes for more than 600,000 UK employees. Headline findings are as follows:
- Basic pay award stands steady. The median basic pay award remains fixed at 3% for the three months to the end of August 2025. This figure has been consistent throughout 2025.
- Most common basic pay award remains at 3%. Almost one-third of pay awards (32.1%) clustered at 3%, while a further quarter (25%) of settlements fell just below, between 2% and 2.99%.
- Settlements lag behind 2024. Within our matched sample analysis, more than half (52.9%) of pay deals were lower than those agreed in 2024. Just under a quarter (23.5%) matched last year's level, while 14.7% received higher settlements.
- Pay freezes return. Around one in 10 settlements (10.7%) in the three months to August 2025 resulted in a pay freeze, following no freezes recorded in the previous rolling quarter.
- Median across all awards unchanged. The overall median, when combining both basic and performance-related awards, stands firmly at 3%.
