According to the latest Incomes Data Research data, the median increase in pay in the private sector was 4 percent during the three-month period ending January 2025.
The percentage of pay increases in the private sector worth at least 5 percent increased from 14 to 17 percent during the most recent analysis period. This pushed the upper quartile from 4 to 4.5 percent. The manufacturing sector was the main driver of this increase, with the upper quartile increasing from 4.3 to 4.5 per cent. Manufacturing pays are settled in January, which is an important month.
The median wage increase in the entire economy was 3.5 percent. This is a half-point lower than the private sector. The median pay rise is down from 4 percent in the second half of 2024. This is the first time since March 2022 that the median has dropped below 4 percent.
The decrease in the median pay award, from 4 to 4.99 percent, in January was due to a decline in the percentage of awards in this range. In January, this group accounted for 31 percent of all increases, down from the 39 percent recorded in December. In the meantime, the percentage of increases in the range 3 percent to 3.99 percent has increased to 41 percent from 33 percent.
Impact of inflation and National Living Wage
The pay awards are still above the Consumer Prices Index (CPI), which is currently at 3 percent for the year January 2025. Inflation could increase the pressure on salaries. The National Living Wage is another important factor. It is expected to increase by 6.7 percent this April. The minimum wage for workers over 21 will be PS12.21. This will affect businesses with employees who are at or near the statutory minimum.
Zoe Woolacott, from IDR, noted that the pay levels may rise again as a result.
The median for the whole economy could rise by April, due to the impact of the NLW’s upcoming increase. Inflation may also be a factor. She said that wage increases tend to be slower than inflation, and the trend of the latter could eventually lead the rise in wages.
Not-for-Profit Sector Sees Lower Pay Growth
IDR’s most recent pay settlement data are based on an example of 68 awards that were effective between the 1 November 2024 to 31 January 2025 and covered nearly 300,000 workers. The majority of awards are from large private organisations with a limited number from the public sector.
Contrary to the private sector, the non-profit sector experienced lower pay growth with a median of only 3 percent. These awards, although they make up a small portion of the data set, contributed to bringing the median for the entire economy below the private sector figure.
Businesses will closely monitor inflation trends, and the impact on pay awards of the National Living Wage increases as the April pay review period approaches.
