UK pay trends: Average pay rise in 2026, salary increases and the outlook for 2027

The average pay rise in the UK in 2026 was 3.2%, the median award employers gave, according to HR Datahub's 2027 Pay Planning Survey of 146 UK employers (September to October 2026). Across the 48 operational UK roles we track, advertised pay for new hires rose by a median of 5.2% in the 12 months to September 2026.

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In February we published our 2026 pay predictions, several of them drawn from our 2026 Pay Planning Report. Here's what employers are telling us about 2027, and how those predictions held up.

Key takeaways

• Employers in our survey gave a median award of 3.2% in 2026, close to the 3.0% median we forecast in our 2026 Pay Planning Report.
• Advertised pay for new hires rose more than 3% in 38 of the 48 operational UK roles we track in the 12 months to September 2026. A 3% award can leave hard-to-fill roles behind the market.
• Employers who have set a 2027 budget expect a median award of 3.0%, and 47% of those giving figures for both years expect to award less.
• Inflation outran the official forecast we reported in February, reaching 3.5% in September 2026, the Office for National Statistics (ONS) inflation figures show. Plan 2027 on more than one inflation path.
• The National Living Wage is estimated at £13.18 from April 2027, a 3.7% rise within a range of £13.02 to £13.34, the Low Pay Commission's consultation letter shows. That would lift the floor faster than the typical award.
• Before signing off your 2027 budget, check your riskiest roles against live UK market pay and cost three National Living Wage rates.

What was the average pay rise in the UK in 2026?

The average pay rise in the UK in 2026 was 3.2%. That's the median (the middle award) among the 142 employers in our 2027 Pay Planning Survey who gave us a 2026 figure. The mean, a straight average of every award, was almost the same, at 3.27%.

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If your finance director wants one number for 2026, that's the one I'd give them.

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Wage growth moves with overtime, promotions and who's on the payroll as well as with pay awards. Regular pay grew 3.7% across all employees in June to August 2026, with the public sector at 6.3% and the private sector at 3.0%, ONS earnings data shows. So the headline 3.7% overstates what private employers are paying existing staff, whose regular pay grew at about the pace of the typical award.

What is the 2026 average pay rise by sector in the UK?

The 2026 average pay rise by sector in the UK ranged from 2.8% in hospitality and leisure to 5.0% in finance and insurance, in the awards employers planned in our 2026 Pay Planning Report. Employers told us these plans in September and October 2025.

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• Finance and insurance: 5.0%
• Health and pharma: 3.4%
• Construction and engineering; professional and business services: 3.3%
• Public sector; technology and media; transport and distribution: 3.2%
• Education: 3.1%
• Charity and non-profit; energy and utilities; manufacturing; real estate; retail: 3.0%
• Hospitality and leisure: 2.8%

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Six sectors planned more than they paid in 2025, four planned less and four held level, our 2026 Pay Planning Report shows. Seven of the 14 sectors rest on fewer than ten responses each, including transport and distribution, so read small moves with care.

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If you hire in finance and insurance, explore live pay by role and location on our average finance salaries in the UK page.

Why a sector average can hide your hardest-to-fill roles

A sector's award figure averages roles that move at very different speeds in the market, so it can hide the roles you find hardest to fill. Hospitality and leisure employers planned 2.8% for 2026, the lowest award of any sector in our 2026 Pay Planning Report.

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In the hospitality roles we track, advertised pay for new hires rose 11.9% for commis chefs and 11.2% for kitchen porters in the 12 months to September 2026. Advertised sous chef pay rose 1.8%, so the premium advertised for a sous chef over a commis chef has shrunk from about 43% to 30%.

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Use your sector's figure as a starting point for the budget, and check your hardest-to-fill roles against live market pay before you set their rise. We found no source that publishes 2026 awards for all 14 sectors on the same basis, so we'll check these plans against what each sector paid when one does.

What will the average pay rise be in the UK in 2027?

The average pay rise in the UK in 2027 is shaping up to be about 3% again. Employers in our 2027 Pay Planning Survey who have set a budget expect a median award of 3.0%, a little below the 3.2% median the survey's employers gave in 2026.

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Our forecast for 2026 landed close to what employers paid, which gives this year's 3% some weight. Inflation reached 3.5% in September 2026, the ONS's inflation figures show, so a 3% award is a pay cut in real terms for your people. That weakens pay as a way to keep them in 2027, and puts more weight on where the budget goes.

What employers told our 2027 Pay Planning Survey

We surveyed 146 UK employers between 23 September and 19 October 2026 about what they paid in 2026 and what they plan for 2027. These are the headline figures, with the number of employers behind each one. Every 2027 figure is what employers expect.

Why 2027 pay budgets are settling at 3%

Affordability is among the biggest influences on the 2027 budget for 88% of employers, and market data for 32%. That weight on affordability is likely why budgets bunch around 3%, and a pot set that way can leave your fastest-moving roles behind the market. That's the gap to check in your own review.

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On our Pay Planning Trends 2026 webinar in late 2025, I said: "broadly I expect companies want stability in 2026 before investing more heading into 2027." Awards stayed close to 3% in 2026. Budgets for 2027 point to about 3% again, so the extra investment I expected is missing from them for now.

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Of the 53 employers still to set a 2027 budget, 27 review pay in April, so their figures will follow the Budget on 28 October 2026 and the confirmed National Living Wage rate. If you're in that group, you'll set your budget with the new floor known.

How employers plan to split the 2027 pay pot

A flat-rate award, the same rise for everyone or a set rate for each grade, is the plan for 54% of employers, up from 42% in our 2026 Pay Planning Report. Another 30% will set each person's rise by their performance and where their pay sits against the market, up from 18%, and manager discretion has halved, from 12% to 6%. The samples differ, so read these as a direction of travel.

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A 3% pot leaves little to differentiate with once the National Living Wage rises faster, so a flat rate is likely the simplest way to protect the lowest paid. Employers competing for scarce skills are likely aiming the pot at strong performers and roles paid below market.

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A hybrid is emerging: at least 5% of employers use a tiered flat rate that varies by grade or workforce group. Among those with a quarter or more of staff near the National Living Wage, the figure is 14% (5 of 37), against 2% (2 of 107) among the rest. A tiered award can protect differentials inside a 3% pot.

Operational services employers expect the biggest 2027 rise

Operational services employers (retail, hospitality, transport and distribution) expect the highest 2027 award of our four sector groups, a mean of 3.40%, up from 2.96% in 2026. The National Living Wage is likely pulling their paybill up, and 48% of those it affects name cost pressure as their greatest challenge. If you're in these sectors, cost the new floor into your pot first.

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Industrial employers (manufacturing, construction and engineering, energy and utilities) paid the most in 2026, a mean of 3.49%, and expect a mean of 3.14% for 2027. They're fighting hardest for skills: 77% name attracting and retaining critical talent as a priority, and 41% plan to split the pot by performance and market position. If you hire the same skills, expect them to compete hard for those roles.

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Each group's 2027 figure rests on fewer than 30 answers, so treat it as a pointer. If you employ drivers or warehouse staff, see live pay for heavy goods vehicle (HGV) drivers and warehouse roles on our average logistics salaries in the UK page.

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What other forecasters expect for 2027

Other forecasters expect pay awards over the next year to stay close to 2026 levels or come in slightly lower.

Firms expect wage growth of 3.4% over the next year, down from 4.0% over the past year, the Bank of England's business survey shows.

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Taken with our survey, that points to 2027 awards of 3% to 3.5%. If you need to win or keep scarce skills, plan to pay above that range for those roles.

Advertised pay has moved faster than pay awards

Advertised pay for new hires rose by a median of 5.2% across the 48 operational UK roles we track, in the 12 months to September 2026. In 38 of the 48 roles it rose by more than 3%. The roles span logistics, hospitality, manufacturing, retail, care and general roles such as cleaners and customer service.

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Advertised pay for HGV Class 2 drivers rose 13.6%, for production managers 10.4% and for sales assistants 2.8%.

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Set that beside our survey and the gap is clear. Employers gave the people they already have a median 3.2% in 2026, and the typical operational role now costs 5.2% more to hire than a year ago. New starters can end up on more than the colleagues who train them.

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This is job-advert data, so it tracks offers to new hires. If you budget 3% for a role where advertised pay has risen 10%, the gap is likely to show up later as turned-down offers, resignations and mid-year rises.

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For a step-by-step method, read our guide to using live market data in your salary review process.

Inflation is the swing factor for 2027 budgets

Based on energy prices in mid-September, inflation is expected to reach around 3.75% in the last three months of 2026 and slightly above 4% early in 2027, the Bank of England's September minutes say. The Bank also judged that "the risks to the inflation outlook are tilted to the upside".

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The official forecast for 2026 ran low. In February we reported the Office for Budget Responsibility's forecast of 2.5% inflation for 2026, set out in HM Treasury's Budget 2025 document, and suggested following the Bank of England's forecast path.

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Inflation reached 3.5% in September 2026, the ONS's inflation figures show, and it has been above that forecast in every month of 2026 so far. The lesson for 2027 is to cost your budget on more than one inflation path.

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Half of the employers in our survey name inflation as one of the biggest influences on their 2027 budget. If prices run above 4% into spring and you hold awards at 3%, your people's pay buys less than it did a year earlier.

How will the April 2027 National Living Wage rise affect pay budgets?

The April 2027 National Living Wage rise will set the floor for every 2027 pay budget that includes low-paid roles, and it's likely to outpace the typical award. The rate is £12.71 today, after a 4.1% rise in April 2026, the government's November 2025 announcement confirmed.

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For April 2027, the National Living Wage is estimated at £13.18, a 3.7% rise, within a range of £13.02 to £13.34, the Low Pay Commission's consultation letter shows. It's an estimate until the government confirms the rate, which is expected around the Budget on 28 October 2026.

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At the central estimate, the floor rises about 0.7 points faster than the median 3.0% award employers expect for 2027. If your entry grade sits at the National Living Wage and you give everyone above it 3%, the entry grade closes in on the grades above it, which is what we mean by pay compression.

What employers told us about the National Living Wage

Our survey shows how widely the floor bites and how employers are responding:

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• Three in four say the National Living Wage affects them, and 30% of all employers say it affects them significantly.
• In operational services (retail, hospitality, transport and distribution), 53% of the 32 employers say it affects them significantly.
• Of those affected, 69% name pay compression as their greatest challenge.
• Of the 107 affected employers who named a response, half are raising pay above the National Living Wage to keep differentials, and 22% are freezing or limiting rises for other groups.

Freezing or limiting rises for other groups, the third most common response at 22%, is likely to make compression worse year on year.

How the size of your low-paid workforce changes the problem

Among the 36 affected employers with a quarter or more of staff near the National Living Wage, 53% name pay compression as their greatest challenge and 47% cost pressure. Below that line, more than three in four name compression. So the more of your workforce sits near the floor, the more the April rise becomes a cost problem as well as a grading one.

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Map which grades each of the three estimated rates would overtake, and decide how much of each gap to keep before the budget is set.

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Our report, The National Living Wage: A Ticking Time Bomb, looks at what the 2024 rise did to pay differentials and sets out ways to manage pay compression in your grades.

What should HR leaders do before the 2027 pay review?

Before the 2027 pay review, I'd do three things. Check your riskiest roles against live UK market pay; cost your budget at three National Living Wage rates and on a higher inflation path; then decide where the budget goes before you lock it.

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Start now. The Budget on 28 October 2026 is expected to confirm the National Living Wage rate, and 51% of employers in our survey review pay in April, when the new rate takes effect. Work through these steps on the estimated range, then run them again once the rate is confirmed.

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Our pay review guide for HR teams walks through each step of your review.

Check your riskiest roles against live UK market pay

I'd start with the roles where advertised pay has risen furthest, such as HGV drivers and production managers, and any grade sitting close to the National Living Wage. Look up each of those roles by job title and location, and note the gap between the market and what you pay today.

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Then check your supervisor grades. Across the operational UK roles we track, advertised pay in customer service rose 4.4% in a year for supervisors, 5.4% for associates and 8.5% for managers. Supervisor pay grew more slowly than the grades on either side of it.

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Care supervisors are squeezed from below. The gap between their advertised pay and care workers' has narrowed from about 10% to 7.5% in a year, so the step up to supervisor is worth less than it was.

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To compare supervisor and manager pay in retail, see live pay by role and location on our average retail salaries in the UK page.

Set the 2027 budget against inflation

Cost your budget at £13.02, £13.18 and £13.34, the low end, central estimate and high end in the Low Pay Commission's consultation letter, before you take it to finance. For each rate, work out the gap between your entry grade and the supervisors above it, then decide how much of that gap to keep. Half of the affected employers in our survey are raising pay above the National Living Wage to keep theirs.

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Then run the same budget against inflation of slightly above 4% early in 2027, the Bank staff projection reported in the Bank of England's September minutes. I'd also run it with inflation a point higher, since the Bank sees the risks tilted upwards. Agree in advance how far behind prices you're prepared to let pay fall.

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If finance pushes back, show them the 2026 median award of 3.2% next to inflation of 3.5% in September 2026, from the ONS's inflation figures.

Decide where the budget goes before you lock it

A flat-rate award is the most common plan for 2027, at 54% of employers in our survey. It's simple to run, and it gives every role in a grade the same rise, including roles where advertised pay has risen 10% or more.

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I'd hold back part of the pot for the roles where the market has moved most. Size it role by role: if advertised pay for a role is up 10% and your award is 3%, the gap is seven points, and you decide how many of those points to close. Keep a small reserve for promotions and mid-year fixes.

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If many of your staff sit near the National Living Wage, consider a tiered award, with a bigger rise for the grades just above the floor and a smaller one higher up, to keep differentials.

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Clear band rules make those calls easier to defend, and our guide to creating a salary band structure shows how to set them.

How our 2026 pay forecasts held up

Our 2026 pay forecasts were closest on pay awards: our February median of 3.0% was within a quarter of a point of the 3.2% employers told our survey they gave. Here's how our February calls, most of them from our 2026 Pay Planning Report, compare with what happened.

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A year earlier, our forecast ran about half a point high. We projected 3.5% for 2025 in our 2025 Pay Planning Report, and awards came in at about 3%, as I said on our webinar.

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We count a figure as right when it lands within a quarter of a percentage point, and mostly right when most of the measures we checked land within it. A call on direction counts as right when it held.

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The inflation figure in our February article was the Office for Budget Responsibility's forecast, which we reported and passed on, so we leave it unscored.

Average pay rise UK 2026: How our February calls compare

Our pay award forecast landed close, and the two risks we flagged in February have grown.

What our 2026 scorecard means for your 2027 pay review

Our two surveys use different samples, so read the awards match as a check on level. The 3.6% from the Bank of England's Agents is a weighted average of the settlements their contacts report, and it runs warmer than our forecast. For a single budget figure, our 3.2% median is the one I'd use.

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Private-sector regular pay growth has slowed from the 3.6% we reported in February to 3.0% in June to August 2026, ONS earnings data shows. With inflation now above the typical award, the thin real gains of the past year are likely to turn into losses.

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Defensible pay ranges need a grading structure behind them, and 35% of employers in our survey list introducing or reviewing grading structures as a priority. If your grades need work, start before any new rules arrive.

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Our UK Pay Transparency Readiness Report shows how ready UK employers are to publish pay in job adverts.

Frequently asked questions: Average pay rise UK 2026

Should employees get a pay rise every year?

A yearly pay rise is typical among the employers in our 2027 Pay Planning Survey, who gave a median award of 3.2% in 2026, and 51% of them review pay in April. If you employ low-paid staff, the legal minimum rates change on 1 April every year, GOV.UK's minimum wage rates page says.

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January is the next most common month for a pay review, at 16% of employers in our survey. So for half of employers, the 2027 pay review falls in the same month as the new National Living Wage rate.

What counts as a good pay rise in the UK?

A good pay rise in the UK beats inflation, which stood at 3.5% in September 2026, the ONS's inflation figures show. By that test, 7% is a strong rise. It's more than double the typical 2026 award, and advertised pay rose 7% or more in 16 of the 48 operational UK roles we track.

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For an employer, the test is wider. A rise is good enough when it keeps the person in the role, and that depends on what the market now pays. Advertised pay for 36 of those 48 roles rose faster than September's inflation.

When will the April 2027 National Living Wage rate be announced?

The April 2027 National Living Wage rate is expected to be confirmed around the Budget on 28 October 2026, the date set in the Chancellor's Budget date letter. Until it's confirmed, plan around the Low Pay Commission's central estimate and both ends of its range.

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The new rate takes effect on 1 April 2027, and the Low Pay Commission's advice is due by the end of October 2026, the Commission's 2026 remit says.

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Last year's rate was announced on 26 November 2025, the government's November 2025 announcement shows.

Check your key roles before your 2027 pay review

Our survey records what employers planned in September and October 2026. The April 2027 National Living Wage rate is still to be confirmed, and advertised pay keeps moving, having risen more than 3% in most of the operational UK roles we track over the past year.

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So treat your 2027 pay review as the start of a year of pay decisions. Check your key roles before the budget is signed off, again once the new rate is confirmed and again whenever a strong candidate turns down an offer or a good person resigns.

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We built our UK salary benchmarking platform for exactly that, with live UK pay data updated daily, so every pay decision is one you can defend.

Book a call with our salary experts.

Sources and how we know

• Our 2027 Pay Planning Survey: 146 UK employers, 23 September to 19 October 2026.
• Our 2026 Pay Planning Report: Over 200 UK organisations, September to October 2025.
• Our 2025 Pay Planning Report: October 2024.
• Our Pay Planning Trends 2026 webinar: Late 2025.
• Our Operational Pay Trends data: 48 operational UK roles, 12 months to September 2026.
• ONS average weekly earnings, October 2026: 20 October 2026.
• ONS consumer price inflation, September 2026: 21 October 2026.
• Incomes Data Research pay award figures: 7 September 2026.
• CIPD Labour Market Outlook, Summer 2026: August 2026.
• Bank of England September 2026 minutes: Inflation projections.
• Bank of England Agents' summary, September 2026: Pay settlements.
• Bank of England Decision Maker Panel, September 2026: Business survey.
• HM Treasury Budget 2025 document: Table 1.1, the Office for Budget Responsibility's November 2025 forecast.
• GOV.UK National Living Wage announcement: November 2025.
• GOV.UK minimum wage rates page: Checked October 2026.
• GOV.UK Low Pay Commission remit 2026: March 2026.
• Low Pay Commission consultation letter: 1 April 2026.
• Chancellor's Budget 2026 date letter: July 2026.
• GOV.UK equal pay and pay discrimination consultation: July 2026.

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