Wage Growth Slows Across UK as Living Costs Stay High

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Zuzana Moscakova, Chief Reporter

Wages in the UK’s private sector are growing more slowly, even after a big jump in the minimum wage. New data suggests many workers aren’t seeing the pay boosts they hoped for, as businesses tighten their belts in a cooling economy.

Between February and April 2025, the typical pay rise in the private sector was 4%, according to research by XpertHR. That’s down from 5% earlier in the year, and it’s the lowest figure seen since mid-2022.

This slowdown in wage growth comes even as the cost of living is still high. Although inflation, which is the rate at which prices rise is easing, many people are still struggling with expensive groceries, rent, and energy bills. For many workers, smaller pay rises mean their money still doesn’t stretch as far as it used to.

In April, the National Living Wage which is the minimum hourly wage for people aged 21 and over, went up from £10.42 to £11.44. It was one of the biggest increases in years, aimed at helping lower-paid workers keep up with rising prices. But this new report shows that beyond minimum wage workers, many people are seeing slower pay growth.

The data comes from nearly 200 pay deals across the UK private sector, covering around 570,000 employees. It found that only one-third of these pay rises were above 5%, compared to around half of them earlier this year. On the other hand, almost one in four workers received pay rises of 3% or less.

This suggests that many employers may be feeling the pinch. Companies are dealing with higher costs for supplies, energy, and borrowing. At the same time, they may be cautious about raising wages too much as they try to avoid job cuts or other financial strain. Meanwhile, millions of public sector workers, such as nurses, teachers, and other government employees, are still waiting to hear what their pay increases will be this year. Unions are pushing the government to offer pay deals that keep up with inflation, especially after years of pay restraint.

Looking ahead, economists think that wage growth will keep slowing down throughout the rest of the year. Inflation is coming down, but the Bank of England is keeping interest rates high to stop it from rising again. That means both workers and employers are likely to face a tough financial climate for a while longer.

In short, while the higher minimum wage is a big help for some, many people in the UK are still waiting to feel real relief in their pay packets, and the trend suggests that wage growth may have already peaked.

Read Zuzana's blog 👉 https://moscakovaportfolio.wordpress.com/

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