Pay trends 2026 | September Report

Sluggish pay growth expected to continue into 2027

UK employers are expected to keep pay awards subdued into 2027, according to HR data and insights provider Brightmine.

The median basic pay award in the three months to the end of August stood at 3%, marking the second consecutive rolling quarter at this level. This follows a downward revision from 3.2% in the previous rolling quarter. The most common basic pay award was also 3%, accounting for almost a third (32%) of settlements.

Brightmine 2027 Pay Forecast research forecasts a continuation of this trajectory across the next 12 months, with a median 3% pay award in the year to 31 August 2027. Awards are expected to remain tightly clustered, with 71% of predicted pay awards falling between 3% and 4%.

Affordability shaping 2027 pay and workforce decisions

There are competing financial pressures facing organisations as they consider pay budgets for the year ahead. The greatest of these downward pressures is affordability, cited by two-thirds (66%) of organisations. More than a third (37%) say increased employer National Insurance contributions will constrain their next pay award, while organisational performance is also expected to exert downward pressure for 26%.

Almost two-thirds (64%) of organisations say inflation and the cost of living are increasing upward pressure on pay awards, followed closely by pay levels within the same industry (52%) and the statutory National Minimum or Living Wage (47%). Despite this, employers are not expecting to return to pay freezes, with 97% of forecast pay reviews expected to result in an increase.

Beyond pay awards, financial pressures are beginning to show up elsewhere in 2027 planning. Almost a quarter (24%) of organisations expect to reduce hiring over the next 12 months, 17% expect spending on bonuses to decrease, and close to a third (31%) expect to increase their use of skills-based hiring. 

Sheila Attwood, Senior Content Manager, Data and HR Insights at Brightmine, comments: “Pay awards remain stagnant, and that very much looks to be the story of 2027. Brightmine data shows pay growth settling at 3%, and there is very little reason for that to shift significantly in the medium term.

“Pay rises are still expected to be the norm, which is a positive. But the size of those increases is being held back by affordability. Employers are having to balance employee expectations around the cost of living with higher employment costs and tighter budgets. As a result, many organisations are likely to beyond base pay, reviewing the wider reward package and recruitment approaches to help retain the skills they need.”

– Sheila Attwood, Senior Content Manager, Data and HR Insights, Brightmine