The NI increase did not cause a ‘knee jerk’ reaction in pay awards

The median wage award has remained at 3% in the first rolling quarter of 2025. This is the fourth consecutive quarter that the pay award has remained unchanged.

Brightmine’s data indicates that, despite the recent rise in national insurance contributions to the government, a dramatic drop in pay awards in the short term is unlikely.

Sheila Attwood is the HR insights and data leader at Brightmine. She said, “At this time, data does not show any sign of a knee-jerk response to recent changes in national insurance.” We do know, however, that employers are taking an observe and wait approach. So, we expect to see this reflected in second half of the year.

“The good news is that the latest GDP figures show stronger-than-expected growth of 0.5% in February, offering some reassurance for businesses. Global uncertainty, particularly in relation to the US government’s actions, continues to cloud the future. These two factors confirm that we believe the pay award levels will remain stable in the near future.”

April is the month with the highest impact on the annual pay review calendar. Almost half of the total pay settlements are made during this time. Early indications of the April 2025 pay agreements suggest that the general pattern is still holding. The median award for basic pay in April was 3%. Deals between the middle 50% ranged from 2% to 3.5%. Brightmine’s data showed that 75.5% were less than the award made at the previous review of the same group.

Attwood said that “this early snapshot confirms the trend we have seen in recent months, namely that most organisations are maintaining their 3% target.” “While there are more lower-level pay awards, the overall picture is one of stability. This is especially true as inflation eases, and NIC changes take effect.”

Brightmine collected information on 125 pay awards which took effect from 1 January to 31 March 2025. This included the results of pay reviews for over 192,000 employees. It found:

The range of pay awards is narrowing. The median value of pay awards is heavily clustered around it, with 50% of the middle 50% of awards falling between 2.5% and 3%.
Few organizations freeze pay. Four organisations have frozen pay, according to the latest data. This shows that, despite the fact that settlement levels are down, most organisations are still providing pay increases.
The focus is on 3%. Nearly one third (31%) were pay awards worth exactly 3%. The remaining 58.4% ranged between 2% to 3%.
Three quarters of the deals this year were lower. A matched sample analysis shows that 72.7% pay awards for the current quarter are less than what the same employees were paid at their last review. Only 15.5% of pay awards were higher than a year earlier, and the remaining 11.8% were at the same levels two years in a a row.
Median for all deals is 3%. The median pay award for the last three months is 3% when analyzing the entire data sample, including both performance-related pay and basic pay.