2025 Pay‑Rise Shock: Most UK Businesses Are Slashing Wages
Startups.co.uk’s 2025 Workforce Report just dropped a bombshell: over 60 % of companies are planning to bump pay by a modest 5% or less. That’s a solid step down from the 5.9% average increase seen last year (Nov 2024 – Jan 2025). In plain English: word on the street is that many workers will get a tepid or even zero raise this year.
Key Numbers That Made Employees Yup and Yawn
- 63% of businesses will give only a 5%‑or‑lower raise.
- 12% of owners plan to keep wages flat for 2025.
- New startups (<1 yr) give 26% no raise, the highest among all age groups.
- After the first year, that number drops to 13%—the more seasoned, the more likely they’ll pad paychecks.
Why the Pay‑Rise Woes Are Real
Two major culprits are turning the salary dial down:
- Employer National Insurance Contributions just spiked in the summer.
- The recent bump in both the National Minimum Wage and the National Living Wage.
When your tax bill climbs, so does your cost‑to‑run a business. So, hang tight, employers—those extra pennies are squeezing the budget.
Industry By Industry: Where the Raises Are Slipping
- Construction – 65% likely to hand out a 5% raise.
- Manufacturing – 40% leaning toward only 5%.
- Technology – 37% sticking to 5%.
- Healthcare – 36% pegging it at 5%.
- E‑commerce/Retail – 30% staying at 5%.
- Consulting – 30% others are offering just 3%.
- Creative Arts – 30% might show up with no raise at all.
- Finance – 27% dropping to an average 3% raise.
Startups? Oh, the Struggles
“These young ventures are the most strapped,” notes editor Zohra Huda. Startups often lean on talent for growth, yet they hang onto every penny. That’s why the group under-1‑year old shows the steepest decline in wage increases.
As the 15% national insurance hike takes effect, fine‑tuning the balance between attracting talent and tightening budgets is the new reality.
How to Sweeten the Deal Without Tipsy Salaries
The report’s silver lining: 88% of small businesses will give below‑average raises, but that doesn’t mean you can’t win hearts over. Think outside the paycheck.
- Free breakfasts in the break room.
- Four‑day work weeks.
- Gig‑style perks, like a “bonus” for new ideas.
Creativity is your paycheck’s best sidekick. If wages are flat, make sure the culture is chilled and rewarding—that’s the real magic trick.
