Pay trends 2026 | August Report

UK pay awards hold steady at 3.2% despite mounting employer cost pressures

UK pay awards remained broadly stable in the three months to the end of July 2026, with the median basic award standing at 3.2%, according to HR data and insights provider Brightmine.

Despite seeing slower pay activity during the summer months, the findings indicate a continuation of the resilience seen so far across 2026. However, a matched-sample comparison points to greater employer caution: 35% of settlements were lower than the previous year for the same employee group, while 35% were unchanged and 30% were higher.

Cost pressures continue to shape employer decisions

Employers continue to contend with a mixed economic outlook. Inflation has moderated, but concerns about growth persist and higher employer National Insurance contributions continue to add to employment costs. Labour market conditions have also eased slightly overall, with unemployment at 4.9%. Younger workers face greater pressure, with unemployment among 18 to 24-year-olds standing at 14.8%.

Sheila Attwood, Senior Content Manager, Data and HR Insights at Brightmine, comments: “Pay awards remain stable despite continued economic uncertainty. That consistency will offer employers and employees some reassurance, but the fact that more than a third of matched pay awards are now lower than last year does suggest some employers are becoming more cautious. Weighed against the priority from the Andy Burnham government to implement further specific cost-of-living support measures, the consistency is positive.