UK pay awards edge up as employer wage trends stay broadly stable
British employers are raising pay slightly more in recent settlements, but the broader pattern in wage awards remains largely unchanged. The latest reading comes as higher labour-related costs, including social security contributions and minimum wage increases, continue to weigh on company budgets.
Highlights
- Median UK pay award rose to 3.1% in the three months to September, up from 3.0% in prior periods, according to Brightmine.
- Brightmine analyzed 42 settlements covering over 650,000 employees, noting higher employer social security contributions and minimum wage hikes are constraining wage growth.
- Pay awards are expected to remain at 3% through 2027, while recent private-sector wage growth could support a potential Bank of England rate hike in November.
Latest survey shows limited movement in settlements
As reported by Reuters, citing Brightmine, the median pay award by UK employers rises to 3.1% in the three months to the end of September, from 3.0% in the previous rolling periods to August and July.The human resources data firm says the latest increase still points to limited change in overall wage trends, with the pace of pay awards remaining below levels seen earlier this year. Most pay deals do not exceed those granted a year earlier.
Brightmine analyses 42 pay settlements reached between July 1 and September 30, covering more than 650,000 employees.
Cost pressures shape outlook for employers
Employer cost pressures continue to constrain room for larger wage increases. Brightmine says higher employer social security contributions are limiting flexibility, while a rise in the minimum wage could put further strain on budgets.The survey also indicates pay awards are expected to stay at 3% in 2027. The figures follow official data released on Tuesday showing private-sector wage growth rises for the first time since the end of 2024, adding to the case for a Bank of England interest rate hike in November.
Our earlier coverage looked at how persistent inflation and firmer UK economic data were shifting expectations toward a Bank of England rate increase in November, with many economists penciling in a move to 4.0%. We also noted that while the economy has absorbed the recent energy-price shock better than initially expected, policymakers still see inflation and market volatility as key risks that could influence the next policy steps.
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