As the impact of the national insurance announcement by the government began to be felt, the median wage award for the third quarter to the end December 2024 fell further to 3.3%.
Brightmine (formerly XpertHR) released a new analysis that showed a sluggish 2nd half of 2024. Pay rises stagnated in Q3 before dropping in November and December, suggesting a downward trend in pay awards.
The previous rolling quarter’s median pay award was 3.5%.
Employers’ pay budgets are likely to be impacted by the government’s increase in national minimum wages and employer’s national insurance contributions, which will both take effect April 2025. Many employers may even adjust their pay awards for 2025 to compensate.
Sheila Attwood is Brightmine’s senior content manager. She said that businesses are under financial pressure at the start of the new year. They are seeking creative ways to reduce the impact of employee pay packages, whether it be by passing on costs to consumers or by reducing employee hours, especially for jobs paying the national living wage for entry level workers, as in the case with Next Group.
“However, in spite of these precautions, the pressure on business is undoubtedly reflected in pay increases we expect to see this year.”
The combination of increasing NICs, changes in NI thresholds and continuing economic pressures will likely result in a decline in pay awards in 2025 compared to the median growth of 4.5% for all of 2024.
The final quarter of the year saw pay deals ranging from 1%-5%. There were no freezes on salaries. Most (77.8% of the pay awards) in the last quarter were less than the deal offered to the same group of employees in 2023.
PROF The median basic pay award for January 2025 is 3.5%, based on insights from 29 settlements. The most common award value is 2%. This is closely followed by 3.5% and 3%.
Brightmine’s most recent pay forecasts survey provides further context. The median prediction from 289 organisations is 3% by 2025. The data from early January is consistent with this. These findings show a cautious approach towards pay awards for 2025, which is shaped by the wider economic landscape and organisational strategy.
Attwood stated: “These early insights reflect the wider impact of UK’s economic conditions and changing government policies.” These trends are fascinating as pay strategies change. They help businesses balance employee priorities and external pressures.
