Pay trends in the UK for 2025: What to expect

How will UK pay evolve in 2025? 

Over the last decade, we’ve seen pay rates fighting to keep pace with the climbing cost of living. Post-Covid, the soaring cost of borrowing, energy, food and other household expenses made it tougher for wage-earners to cover their day-to-day living costs. CPI increases, shifts in labour markets and government initiatives all put extra pressure on employers to pay their people more, but in 2023 wages finally caught up with inflation. 

Now, with a Labour government in power, inflation easing and fresh pay legislation on the statute books, what pay trends will emerge over the next 12 months? 

2024 UK Pay Trends - A Recap

What can last year’s pay trends tell us? 

In the run-up to 2025, the Office for National Statistics (ONS) identified a 5.2% annual average salary increase in the UK in surveys of 9000 UK employers run between August and October 2024. This applied to both average regular earnings (i.e. pay excluding bonuses) and total earnings. Using the CPIH (CPI including housing costs) to take inflation into consideration, this translated into net annual wage growth of 2.2%. 

The ONS monthly surveys for this period also picked up sector-by-sector nuances, with average private sector earnings growth (unadjusted) of 5.4% ahead of the public sector at 4.3%. The manufacturing industry saw the largest year-on-year wage growth, averaging out at 6.0%.  

2025: Pressures on Salary Growth

Looking forward to the rest of 2025, if the UK Government hits its target of stabilising inflation to 2% or below, the upward trend of the cost of living will flatten, allowing pay packets to go further and easing pressure on employers to pay more. 

On the other hand, the 6.7% rise in the National Living Wage (NLW) and 1.2% hike in Employer’s National Insurance (NI) are set to kick in from April 2025 and squeeze pay budgets much harder. Read our National Living Wage Report >> 

Employers face a tricky conundrum. How to embrace new minimum wage legislation in a low-growth economy where consumers are spending less and profit margins are thinning. Attracting and retaining the best talent is vital to fuel business performance, yet many businesses are finding it harder to afford market-competitive salaries for their most valued people. 

How do you plan for pay in a multi-inflationary world? Our survey report on pay strategies for 2025 shows you how. Read the HR DataHub 2024 Pay Planning Report >>

2025: How Much Will UK Salaries Increase?

Our research points to a further downturn in the scale of pay awards since the peak of 2023. Our HR DataHub poll of 120 HR decision makers taken in October 2024 showed projected 2025 pay awards for trade union and non-trade union pay deals averaging 3.5% with a lower quartile of 3.0%. These results show a significant drop from 2024 averages of 5.0% (trade union) and 4.0% (non-unionised). 

We ran our survey before Rachel Reeves’ 2024 Autumn Budget announcement of the 1.2% NI increase and 6.7% rise in NLW planned for April 2025. Clearly, even before these additional costs-to-business were made public, budget-holders were preparing to rein in pay spend for 2025.

Will Higher Employer NI Affect UK Salary Increases in 2025?

From April 2025 all UK companies will be obliged to pay higher Employers NI, with rates climbing from 13.8% to 15%. 

Our HR DataHub follow-on survey in November 2024 asked 150 UK companies what measures they were planning to counteract the cost of paying more NI. 

• 83% of respondents said they will need to take some form of corrective action in 2025, with 45% opting to slim down their pay budgets and 18% deciding to make further efficiencies.
  
  
• Most employers will be finding savings by cutting costs, with only one in 10 opting to hike their prices to offset the NI increase, an indication that companies see the importance of being price-competitive in a price-sensitive economy. 

2025: Rises in the National Living Wage

Introduced in 2016 as an extension of the National Minimum Wage launched in 1999, the National Living Wage (NLW) increased from £10.42 to £11.44 an hour in April 2024. 

This 9.8% rise was followed by an announcement in the most recent Autumn Budget that the NLW will grow further from 1^st April 2025. 

The new 2025 NLW pay rates guarantee workers aged 21 or over a further 6.7% to £12.21 per hour, 18-20 year-olds a 16.3% increase to £10.00 per hour and a rise of 18% for 16-17 year-olds and apprentices to £7.55 per hour. 

2025: Pay Trends by Sector

While universal economic factors are likely to affect all corners of the UK economy in 2025, some industries seem more resilient and able to fund more generous pay rises. Our survey shows that high-growth verticals such as Technology & Media and Professional & Business Services are budgeting healthy average pay rises in 2025 of 4.42% and 4.25% respectively, well above the expected 3.5% average across all industries. 

Businesses in Retail (4% rise) and Hospitality & Leisure (3.6% rise) which generally employ a comparatively high ratio of workers on lower salaries are also predicted to exceed the 3.5% median, perhaps a reflection of the NLW increase having an especially big impact on these industries.  

2025: Average Salaries for UK Workers

According to ONS data, average pre-tax weekly earnings in the UK (December 2024) were £710 (total earnings) and £664 (regular earnings). Unsurprisingly, pay is set to vary according to job function. 

For example, salary averages for marketing (£36,000* per year) and purchasing (£36,300* per year) roles will exceed those for administration (£20,800* per year) and sales (£28,000* per year) positions.

*Statista 2024

Public Sector Salary Trends in 2025

After years of trailing behind the private sector, UK public sector employees will at last see their pay rise faster in 2025. A CIPD survey taken in September and October 2024 showed that average expected pay increases for the following 12 months are 4.0% compared to 2.5% for the previous quarter. 

"Significant public sector pay awards announced since the election, along with the additional public sector spending announced in the recent budget, have provided a welcome boost to public sector employers and workers."‍James Cockett CIPD Senior Labour Market Economist

When the new Labour government came to power in July 2024, the public sector was promised pay rises of 4.5% to 6.0% to compensate for the pandemic years, when public sector pay failed to keep up with more generous private sector pay awards. This year will likely see a reset, partly funded by the government’s hike in Employer’s NI scheduled for April 2025.

Identify Pay Trends with HR DataHub 

HR DataHub helps pay professionals identify pay trends and plan their salary budgets for 2025 and beyond by giving them powerful real-time market insights in an instant.

 By collecting pay data from over 30 million UK job postings HR DataHub brings you live pay benchmarks for any role in any UK location. It gives you the insights and confidence to make 

balanced and well-informed pay-related decisions, from individual employee pay reviews to setting companywide pay strategies tuned to the fast-changing pay marketplace.

Keen to learn more? Book a demo with one of the HR DataHub team >>