In an uncertain economy, pay awards are cautious.

In May, the median pay award for the UK was 3%. The public sector outperformed the private sector.

Brightmine reports that the median of 3% has remained the same for six consecutive rolling quarters as companies adopt a more conservative approach to the current economic climate.

The government is responding to pressures from the unions as well as the public in the public sector to support civil servants and essential workers.

Brightmine’s statistics show that the range of awards was between 3,5% and 5% for employers in the public sector.

Sheila Attwood is the HR insights and data leader. She predicted that inflation, which increased sharply in April, would likely remain higher than pay awards for a long time to come.

The company noted that the number of job vacancies fell from 760,000 down to 736,000. This was due to more conservative hiring rather than widespread redundancies.

In May, after an “awful” April in which businesses were hit with a rise in employer contributions to national insurance and other costs – inflation was still above the Bank of England target of 2%.

Brightmine’s sample of data shows that a fifth (or 3%) of all awards are worth exactly this amount. This is the most common award for the last quarter. The next highest award was 2.5% which accounted for 14.5%.

Only 4.7% of the awards received were higher than what was paid to employees in 2024. Most of the rest received the same award they did last year.

Attwood stated: “This gap in pay between the public and private sectors reflects two very distinct reward strategies.”

In the public sector, awards from government are used to address long-standing pressures on workforce and support critical services. Private sector employers, meanwhile, are maintaining their 3% level, as they take a more conservative approach while waiting for stronger economic signals.

She said that employers are trying to balance the cost pressures and the need to retain talented employees.

She said, “What we are seeing is a cautious and balanced approach to salary budgets, with a focus on terms and conditions including employee benefits.”

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