Brightmine has found that UK pay awards held at 3.3% for the three months to the end of June 2026, marking a third consecutive rolling quarter at the same level.
The HR data and insights provider said the median figure has remained resilient despite difficult trading conditions, geopolitical uncertainty, muted growth, and higher costs. Beneath that stable headline, almost half of matched settlements were lower than those awarded in 2025.
Brightmine said 45.7% of matched settlements were lower than last year. With the year now at its halfway point, the current 3.3% figure is likely to provide an indication of where pay awards may settle across 2026 as a whole, unless economic conditions change materially.
Sheila Attwood, senior content manager for data and HR insights at Brightmine, said: “Pay awards remain consistent, a trend unbroken over three rolling quarters.”
The data gives reward, HR, and finance teams a fresh benchmark as wage planning for 2027 begins. Pay awards are no longer running at the elevated levels seen during the peak of the recent inflation shock, but they have not fallen sharply enough to remove labour cost pressure from budgets.
Official labour market data released on 21 July showed annual growth in employees’ average regular earnings in Great Britain at 3.4% in March to May 2026, with total earnings growth at 4.3%. The Bank of England has continued to monitor wage setting behaviour as part of its assessment of inflation persistence, alongside services inflation, pricing intentions, and expectations.
Brightmine’s figures suggest that pay restraint is becoming more structured rather than abrupt. Organisations appear to be finding settlements they regard as sustainable, while reducing awards relative to last year in many cases. That is different from a broad freeze, and it reflects the difficulty of cutting reward too sharply in a labour market where skills shortages remain uneven across sectors.
Cost management is already shaping workforce decisions. Britain’s labour market has cooled at the edges, with CIPD data showing employers placing greater emphasis on cost control than growth, productivity, or workforce expansion. The Brightmine data fits that pattern: pay growth has stabilised, yet companies are still managing margins carefully.
Retail, hospitality, care, logistics, construction, professional services, and public facing service operations all face different versions of the same reward challenge. Higher wage floors and employer costs raise the baseline, while experienced workers expect internal progression and scarce skills still command premiums. A median award does not capture pressure inside individual job families, regions, or specialist roles.
Wage compression remains a practical management issue. When entry pay rises because of statutory increases or market shortages, the gap between junior and supervisory roles can narrow. Employers then face pressure to adjust pay further up the structure, even where budgets were set for modest overall increases. Without that adjustment, progression can become less attractive and line manager roles harder to fill.
The finance calculation is equally complex. Pay is one of the largest controllable cost lines for many organisations, but reducing awards carries consequences for retention, morale, service levels, and recruitment. A lower settlement can improve short term cost control, while a poorly judged award may increase turnover, training costs, and operational disruption.
The reward cycle is also being pulled closer to benefits strategy. Where larger salary increases are unaffordable, organisations may use flexible working, wellbeing support, financial education, targeted allowances, skills development, or bonus redesign to maintain engagement. Those measures can help, although they do not substitute for pay where households remain under pressure from housing, utilities, transport, and food costs.
Inflation expectations will influence how stable the 3.3% level remains. Employees compare pay settlements not only with headline inflation, but with household experience, mortgage or rent costs, childcare, commuting, and the cost of everyday services. If those pressures rise again, a settlement that looks sustainable in finance plans may feel inadequate to employees.
In 2027 planning, segmentation will do more work than a single organisation wide figure. Some roles can be recruited without difficulty, while others remain critical constraints on growth, service quality, compliance, or delivery. Clear job architecture, better workforce data, and stronger pay governance will help determine where restraint is safe and where underinvestment in reward would create larger costs later.
The steady median does not describe a settled employment environment. It describes a cautious settlement between affordability and retention, with employers still making awards while many reduce increases compared with last year. The next test will be whether that balance holds if inflation rises, productivity remains weak, or competition for specialist labour intensifies.
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