Pay trends 2025 | June report

Public‑sector pay awards outpace private sector at 4.4%

New data from Brightmine, the HR data and insights provider, reveals that the UK median basic pay award remains at 3% for a sixth consecutive rolling quarter, with private sector pay increases continuing to lag behind inflation. In contrast, median pay awards in the public sector stand at 4.4% in the 12 months to May 2025, driven by targeted increases across key worker groups.

Recent public sector pay review decisions have resulted in a range of awards between 3.5% and 5%. With the overall public sector median sitting above inflation, these rises reflect the government’s efforts to support essential workers and civil service departments, and address sector-specific pressures.

Sheila Attwood, HR Insights and Data Lead at Brightmine, comments: “This clear gap between public and private sector pay reflects two very different reward strategies. In the public sector, government-led awards are being used to tackle long-standing workforce pressures and support key services. Meanwhile, private sector employers are holding steady at 3%, taking a more cautious approach as, they wait for firmer economic signals.”

The economic picture

Pay restraint across sectors continues against a backdrop of mixed signals. Inflation rose sharply in April, before easing slightly in May. Consumer Prices Index (CPI) inflation dipped by 0.1 percentage point to 3.4%, while the Retail Prices Index (RPI) fell from 4.5% to 4.3%. Inflation is expected to remain elevated over the summer, with more significant declines not forecast until mid-2026, therefore it is likely to remain above pay awards for the foreseeable future.

Economic growth has also shown signs of slowing. After a 0.7% quarter-on-quarter rise in Q1 2025, GDP contracted by 0.3% in April, suggesting that earlier momentum is faltering. At the same time, the labour market is beginning to cool. Unemployment edged up from 4.5% to 4.6%, while job vacancies dropped from 760,000 to 736,000. Rather than indicating widespread redundancies, economists suggest these figures point to a more cautious hiring environment.

“With the economic outlook still uncertain and private sector pay settlements stuck at 3%, employers are clearly trying to balance cost pressures with the need to retain talent,” added Attwood. “What we’re seeing is a cautious approach to salary budget increases, balanced by a focus on other terms and conditions, including employee benefits.”

Brightmine May 2025 Pay Trends Highlights

Brightmine has collected details of 196 pay awards that took effect between 1 March and 31 May 2025, covering the pay review outcomes for more than 2.9 million employees. Our headline findings are as follows:

• 3% is the most common award. A fifth (20.1%) of pay awards were worth exactly 3%, making this the most common outcome of the pay reviews concluded in the past three months. This was followed by 2.5%, making up 14.5% of awards.
• Lower pay awards prevail. Almost eight pay awards in 10 (79.7%) are lower than the same group of employees received in 2024, within our matched sample analysis. Among the remainder, the majority received the same award both this year and last, with just 4.7% of the total receiving higher settlements than a year ago.
• Pay rises win over pay freezes. While the level of pay awards has come down from that recorded a year ago, organisations for the most part continue to award increases, with only 3.6% of the pay reviews recorded in the latest quarter resulting in a pay freeze.
• Median of all deals is 3%. Across both basic and performance-based pay awards, the median also stands at 3%.

Pay review pattern – private and public sectors, May 2024 to May 2025

Pay review pattern – whole economy, May 2024 to May 2025