Labour market indicators

While inflation was up this month, pay deals recorded for July 2025 were lower than in previous months.

Pay deals recorded by the LRD Payline service for the three months to July show the median pay rise was 3.5%, down from 4% for the past three months (including April when most bargaining units have their anniversary date).

Employers expect basic pay to increase by 3% over the next 12 months, according to the quarterly Labour Market Outlook survey by the CIPD HR professionals’ body.

The median expected pay deal was 3% in both the private and public sectors, with the voluntary sector trailing behind at 2.5%. Inflation (CPI) is expected to remain above 3% throughout 2025 and into 2026.

The CIPD survey also recorded a poor outlook for hiring. Only 57% of private sector employers intend to hire in the next three months, with 25% expecting staff levels to increase, and 16% expecting it to decrease in the next three months.

The balance of employers planning to grow versus shrink their workforce is therefore at +9, described as an “unprecedented low” outside of the pandemic.

The outlook was somewhat better for large employers in the private sector, with 29% planning to increase their workforce.