'Cautious approach' | Pay awards stagnate at as National Insurance hikes loom

Pay awards have stabilised at 3% for the third consecutive rolling quarter in February, confirming the lowest pay awards since December 2021, new data from Brightmine, the HR data and insights provider, reveals.

Against the backdrop of rising National Insurance contributions, businesses are maintaining cautious pay strategies, marking a clear shift from last year’s more generous settlements.

This month also marks a shift in the balance between pay awards and inflation. The latest inflation data (January 2025) shows that payawards are now aligned with CPI inflation at 3%. This ends a 15-month period, starting in October 2023, where pay awards consistently outpaced inflation.

Sheila Attwood, senior content manager, data and HR insights at Brightmine comments: “The stabilisation of pay awards reflects a more cautious approach from employers as they balance wage growth and rising costs. While pay settlements remain below last year's levels, we are seeing pay awards align with inflation, which may see some relief from businesses who previously needed to keep pace with higher-than-expected inflation levels.”