Median pay award falls to lowest level since March 2022, data finds

Private sector pay increases held steady at a median of 4.0% in the three months to January 2025, but the median pay award for the whole economy fell to 3.5%—its lowest level since March 2022, according to the latest figures from Incomes Data Research (IDR).

The drop in the overall median from 4.0% in December has been influenced by a smaller proportion of pay rises between 4% and 4.99%, with less than a third (31%) of increases falling into this bracket, down from 39% in December.

At the same time, pay awards between 3% and 3.99% have become more common, rising from 33% to 41%.

In the private sector, the proportion of pay rises worth 5% or more increased from 14% in December to 17% in the latest period, pushing the upper quartile of awards from 4.0% to 4.5%.

These shifts have been largely driven by the manufacturing sector, where the upper quartile now sits at 4.5%, up from 4.3%.

January is a key month for pay deals in manufacturing, contributing to the overall stability in the private sector median.

Despite the decline in the overall economy’s median, pay awards remain above the current rate of CPI inflation, which stood at 3.0% in the year to January 2025.

However, inflationary pressures and the forthcoming rise in the National Living Wage (NLW) could influence future pay settlements.