Workplace Report (July 2025)

Ingrained Inflation

May’s high inflation figure shows it barely eased following April’s jump. Given both domestic and international pressures, higher than expected inflation looks like the story of 2025, risking prolonged pay deterioration.

UK inflation remained well above the Bank of England’s official target, an outlook further complicated by conflict in the Middle East, which risks pushing oil prices higher. This along with an economy struggling to grow (April saw a 0.3% contraction in GDP) and a weakening jobs market, means prospects for real terms wage growth are limited. Yet Payline continues to report life in negotiations and May saw a modest increase in the lowest basic median to 4%. We can also see some powerful wins on pay, with some workers seeing wage rises of nearly 10%, as well as bonuses, improved conditions and backdated payments.

Using data from LRD’s Payline, our feature on Special leave reveals a complicated mix of statutory entitlements and voluntary arrangements, that has produced a fragmentary support system to deal with what are common – and difficult – situations for workers, wherever they work. Planned changes under the Employment Rights Bill look too limited to address this.

Our second feature on collective bargaining makes a powerful case for its continuing relevance, the need for far more to be done in the private sector and potential uplift it will receive with the government’s plans for social care.


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