LONDON (Reuters) – Pay increases granted by British employers held steady in the three months to January at the lowest level since 2021, signalling a shift towards more restrained rises as businesses try to cope with economic pressures, according to a survey on Wednesday.
Human resources data firm Brightmine said the median pay award held at 3% for the second consecutive rolling quarter, following a revision of figures from 3.3% for the three months to December 2024.
“This is the lowest median pay settlement recorded since December 2021,” Brightmine said in a statement, adding that upcoming increases in employers’ social security contributions could further influence pay decisions in the months ahead.
Employers say the government’s plan to boost the social security contributions they pay from April – when Britain’s minimum wage is also due to rise by almost 7% – will reduce hiring and wage growth.
Data from the Office of National Statistics showed on Tuesday that British pay growth accelerated in late 2024 but the Bank of England expects pay increases to slow soon as weakness in the economy weighs on the labour market.
The British economy stagnated in the third quarter of 2024 but unexpectedly grew 0.1% in the last three months of the year.
Brightmine’s survey also showed that turnover rates have remained largely unchanged in 2024 compared to the previous year. However, more than one-third of organisations are concerned that turnover levels are too high.
“While labour turnover rates have stabilised, the combination of pay awards stalling and ongoing concerns about workload and career progression could increase resignations later in 2025,” said Brightmine’s Sheila Attwood.
“Employers may need to balance cost control with competitive pay and other retention measures to avoid unwanted staff losses,” Attwood added.
(Reporting by Catarina Demony; Editing by Sandra Maler)
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