The national living wage has increased this year, and the research suggests that the pay settlements have increased slightly over the past three months. However, the job market is still very challenging for most.
Incomes Data Research’s latest monitoring figures show that the median wage increase in the economy increased from 3.2% to a 3.4% rise over the next three months, up to May 2025.
The increase in April’s national living wage (NLW) was the main driver of the rise, it was argued.
IDR reported that the proportion of pay increases worth 6% or higher grew from 12% to 15% during the latest analysis period due to the latest increase of the NLW which increased by 6.7% on 1 April to PS12.21.
This change affected many private sector pay reviews, especially those in low-paying fields such as hospitality and retail. As a result, the median was higher here at 3.5%.
The manufacturing and production outcomes were mostly unchanged since IDR’s April study. The median remained at 3.5%, and the interquartile spread narrowed a bit from 3.0% to 4.0% to 3.0% to 3.9%.
The National Living Wage is less impactful in manufacturing than it is on private services. Manufacturing employers are still under pressure to pay competitive salaries to attract and retain employees, said Zoe Woolacott of IDR.
In the public sector the median pay award was 3,6%. This is largely due to the fact that the government accepted the majority of the pay increases recommended by independent pay review bodies this year.
Research has shown that the job market is still very difficult this year. According to a report by job-matching platform Adzuna, entry-level jobs have declined by almost a third in the last three years since AI tools with generative capabilities became widely available at the end 2022.
According to research from the jobs platform Indeed, graduate job vacancies are expected to be down 12% this summer compared to last year. This is their lowest level since 2018.
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