UK Pay Planning 2025: Why Salaries Might Outpace Inflation (once again)
Inflation in the UK has taken a nosedive over the past year—good news for your bank balance—but that doesn’t erase the pinch people feel from living costs and the lingering challenge employers face when budgeting staff salaries for next year.
3R Strategy’s 4th Global Salary Planning Report: A Road‑map for 2025
- Global span – Responses from over 40 countries, 20+ industries.
- Salary budgets – 2024 data + 2025 forecasts.
- Deep dive – Pay transparency, performance pay, gender gap reporting, and more.
Key Findings on Inflation vs. Pay Increases
- 2022 – Inflation 8.6 %; most firms set pay budgets at 5 % (great for the economy, terrible for your paycheck).
- 2023 – Inflation slid to 6.3 %; the pay budget stayed at 5 %—no real change.
- 2024 (September) – Inflation dropped to 1.7 %, the lowest in three years. Median pay increase budget: 4 %.
- 2025 forecast – 3.5 % pay boost. That means employees may finally get wages rising faster than inflation for the first time since the pandemic.
Sector‑wise Snapshots
When you look by country & industry, differences pop up:
- UK Financial Services – 5 % pay budget (hot market, keep talent in).
- Charities – 2 % budget (just a touch of love).
- Media & Arts – 2.8 % (because artistic flair costs something).
What the Autumn Budget Means for Pay
The government’s 2025 four‑point plan brings a 6.7 % National Living Wage hike from April 2025—outshining many of the planned budgets.
- If you’re budgeting 3.5 %, you’ll still need to bump entry‑level salaries up by 6.7 % to stay compliant.
- Employer National Insurance Contributions (NIC) jump from 13.8 % to 15 %. This could squeeze company budgets, maybe resulting in smaller pay hikes.
Pay Transparency – Company Culture Corner
While 64 % of firms claim clear pay principles and processes, only 57 % actually communicate them. Shockingly, 35 % do nothing at all. Employees deserve to see the numbers.
- Salary ranges: 68 % of organisations have them, but only 26 % share with staff in any country.
- Job adverts: 66 % now show pay ranges—good, but 29 % still hide them, missing out on amazing talent.
- Salary info ask: 51 % still ask candidates for current salaries—think about that, it can perpetuate pay gaps and hamper diversity.
Gender Pay Gap Reporting
UK mandates pay gap disclosures. Yet, only 28 % track it by job level or grade. That finer detail could flag hidden problems early.
Founder’s Take
Rameez Kaleem, Founder & Managing Director of 3R Strategy, shares:
“We’re thrilled with the participation this year—over 40 countries, 20 sectors. The bright spot is the predicted real rise in UK salaries for the first time since the pandemic, thanks to a sharp drop in inflation and easing rates. We hope this report helps businesses attract—and keep—talent in a tough economy.”
Ready to plan your 2025 pay budgets? Grab this report and keep your team happy—because when earnings rise faster than coffee prices, everyone wins.
