Brightmine, a provider of HR insights, has released new data that shows an increase in average pay for the fourth quarter of 2024. This is a continuation of the downward trend that began earlier this year.
Based on 12 pay awards that covered around 3,000 UK workers, the analysis shows that most of the deals during this period were between 1 and 5 percent. This quarter, no freezes in pay were implemented. 77.8 % of the awards are lower than the ones granted to the same groups of employees in 2023.
Brightmine data indicates that employers are preparing to deal with the financial impact from higher National Insurance Contributions and an increase in minimum wage rates. These are due to come into effect on April 20, 2025. These factors will put additional pressure on budgets for pay increases, possibly reducing the median increase in pay to below the 4.5 per cent recorded in 2024.
The pressure of NIC and Minimum wage increases
In 2025, the UK Government’s decision on raising NICs and implementing higher minimum wages rates will likely influence pay decisions. These additional costs could result in cautious adjustments being made to pay awards if inflation rates remain stable.
Sheila Attwood is Brightmine’s senior content manager for data and HR insight. 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, 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.”
Brightmine’s preliminaries for January 2025 indicate a median basic wage award of 3.5 per cent, based 29 settlements that have been analysed to date. This suggests that careful pay adjustments will become a trend in the months to come.
The most common award in these early 2025 settlements is 2 percent. Closely followed by 3 and 3.5 percent. Brightmine’s pay forecasts for 2025 predict an average pay increase of 3% based on responses received from 289 organizations.
Sheila Attwood said, “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.
