The Work Foundation at Lancaster University responded to Office for National Statistics figures on employee earnings in the UK in 2025. Rebecca Florisson, Principal Analyst from the Work Foundation at Lancaster University commented:

“Today’s figures underline the impact of ongoing cost of living pressures on workers across the country, as while the average full-time worker's annual wage in the UK has risen by 5.3% in nominal terms, workers have only seen a 1.1% increase on average in real terms (adjusted for CPIH inflation).

"Importantly, the data suggests that low-paid jobs have benefited from the rise in the National Living Wage, introduced in April 2025. However, the long shadow of the cost of living crisis and high inflation means workers across the country are not feeling the reward of this pay growth in their pockets. Work Foundation survey data suggests four in ten workers (43%) state they have little or nothing left after paying their bills – putting the idea of saving or going on holiday out of reach for millions of workers.

"In addition, nominal wage growth has lagged behind the national average in sectors like accommodation and food services (3.9%) and wholesale and retail (3.8%). This presents workers in these sectors with additional pressures, especially as they are more likely to be on insecure and precarious contracts, with uncertain hours and pay.

"This is one of the biggest challenges facing the Chancellor as she prepares for her Autumn Budget. While the focus is likely to be on how the Government raises more revenue and bears down on spending, the Chancellor must prioritise improving living standards across the country, while protecting those already struggling to make ends meet.”

Slow progress to close the gender pay gap

“The gender pay has continued to narrow to 6.9%, down from 7.1% in 2024, but it remains persistent and is reducing at a glacial pace. Women remain twice as likely as men to be in insecure and low-paid work as men, as they are too often pushed to trade security at work for flexibility. Mothers, disabled women, and women from Black, Pakistani and Bangladeshi backgrounds are most likely to be hit hardest.

“While the gender pay gap is larger among high earners than among lower-paid employees, many women are still forced to choose between their careers and their families. On average women are earning £1.40 per hour less than men, which harms individuals and embeds inequality in the UK economy.

“Government and employers must continue to prioritise closing this gender pay divide, including by boosting number of jobs that are secure and flexible, improving the availability and affordability of childcare options, and ensuring action is taken on persistent pay gaps within organisations.”