British pay settlements remain at 3.5% in the three months to May, underscoring continued wage pressure in an area closely watched by the Bank of England. The latest reading marks the fifth consecutive survey period at that level, suggesting pay growth is easing only slowly across the economy.
Highlights
- Incomes Data Research reports the median UK pay award held at 3.5% for the three months to May, matching the previous four periods.
- April's 4.1% National Living Wage hike to £12.71 an hour boosted pay reviews in lower-wage sectors, with manufacturers also raising pay to attract staff.
- Persistent wage pressures keep employer and policymaker focus on labour costs as inflation risks linger, despite employers forecasting smaller pay deals for 2027.
Survey findings and wage drivers
As reported by Reuters, data company Incomes Data Research said the median pay award across the economy is 3.5% in the three months to May. That matches the previous four survey periods and points to resilient pay growth despite broader expectations that employers may become more cautious over time.IDR says pay awards are supported in part by April's 4.1% increase in the National Living Wage to 12.71 pounds an hour. The rise feeds into pay reviews in lower-paying sectors including care, hospitality and retail, while the company also notes more higher-end pay deals among manufacturing employers.
IDR senior researcher Zoe Woolacott says manufacturers still face pressure to offer competitive pay to recruit and retain staff. The survey covers 247 pay awards effective between March 1 and May 31, mainly at large organisations, and represents nearly 3.9 million workers.
Implications for employers and monetary policy
For employers and policymakers, the figures indicate that domestic wage pressures remain persistent rather than weakening sharply. That keeps attention on labour cost trends as the Bank of England assesses inflation risks tied to pay growth.The findings broadly align with a survey published last month by human resources publisher Brightmine, which also shows pay awards staying above 3%. However, employers in that survey forecast smaller pay deals in 2027, pointing to possible moderation ahead even as current settlements remain firm.
Andy Burnham’s emerging economic blueprint for a potential incoming government focused on easing household cost pressures while supporting local businesses. We previously reported that the plan floated measures such as relief on energy bills and transport costs, potential cuts to business rates, and the option of lowering national insurance costs for SME employers, alongside a commitment to existing fiscal rules and a push for more public control in key sectors.
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