Wage increases offered by UK employers saw a modest dip in the three months leading up to April, even though the recent rise in the national minimum wage led to notable gains for some lower-paid workers.
This shift is likely to be seen as positive news by the Bank of England, which has projected a significant slowdown in earnings growth this year as part of its strategy to bring inflation back down to its 2% target.
New figures from Incomes Data Research (IDR) show that the typical private-sector pay rise dropped slightly to 3.4%, compared to 3.5% in the previous quarter. Despite this overall decline, more companies began offering higher pay increases. In fact, 11% of employers granted wage hikes above 6% in April—up from just 2% in March—largely due to the 6.7% increase in the minimum wage, which brought the hourly rate to £12.21 ($16.51).
April also marked the introduction of higher national insurance contributions for businesses, a move that has led some employers to be more cautious about recruitment.
Across all sectors, wage agreements remained steady at 3.2%, supported by a 2.7% increase in salaries among not-for-profit organizations. The report analyzed 129 pay deals involving around 1.3 million employees, primarily in large companies, with limited input from public-sector employers.
Official wage statistics for the same period are expected to be released shortly, with economists predicting a slight drop in average earnings growth—excluding bonuses—from 5.6% to 5.4%.
Although average pay data often appears higher than wage settlements—partly due to shifts in job roles and the creation of higher-paying positions—the central bank estimates that a pay growth rate closer to 3% is needed to maintain stable inflation in the long run.
