The planned pay awards of our respondents were in the region of 2% - 5%, with an expected average of 3.25%. This is largely in line with the CIPD’s recent Labour Market Outlook which expects a median 2025 pay award of 3%, down from a pre-budget expectation of 3.5%.

Inflation remains the key driver of pay awards in our sample. The Bank of England Monetary Policy Report suggests that ‘Inflation is following a bumpy path. It will increase temporarily in 2025, and likely to rise to 3.7% over the first half of the year, before falling back to the 2% target.’ The Bank continues to caveat this by stating that there may be ‘global shocks’ such as ‘global tariffs or developments in the Middle East’ that may affect their projections.

There is more to pay determination though, with almost half of our respondents considering individual performance, competencies, and market rates when determining their pay awards. Over half of respondents operate no pay structure/framework and of those who do, only 60% are transparent.

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