Real weekly wages have increased by a paltry £1.50 since last September 14 October 2025 The weakening jobs market is finally affecting pay packets, with wage growth in the private sector slowing sharply over the summer, the Resolution Foundation said today (Tuesday) in response to the latest ONS labour market statistics. The number of payrolled jobs was little changed in August with a small rise of 10,000 compared to July and early data suggesting they fell back by 10,000 in September. The Foundation’s employment estimate – based on this data, FOI returns on self-employment and ONS population data – suggests that the employment rate has been falling for 11 months and now stands at 75.2 per cent. The ONS unemployment rate (which is far more reliable than its employment rate) nudged up to 4.8 per cent in August. This ongoing cooling of the jobs market is finally affecting on pay packets. While headline annualised nominal weekly pay (excluding bonuses) grew by 4.7 per cent in the three months to August, shorter term indicators suggest a marked slowing over the summer. Nominal private sector pay growth slowed to an annualised rate of 3.5 per cent in the three months to August, compared to the previous three months – close to rates that the Bank of England believe to be sustainable over the long run. After adjusting for inflation, weekly wages have increased by just £1.50 over the past 11 months – from £680.50 last September to £682 in August – barely enough to cover the cost of a Greggs sausage roll. The final estimate for annualised total nominal weekly pay (including bonuses) in the three months to July of 4.8 per cent will be used to calculate the rise in the state pension next April. The Foundation calculates that the new State Pension is set to rise by £576 to £12,582 a year. This bumper rise should help to cushion pensioners from any tax rises in the upcoming Budget. The Foundation’s proposal to switch 2p of National Insurance onto Income Tax would mean a tax rise of £250 for a pensioner with an income of £25,000 – less than half the rise as a result of the Triple Lock. Charlie McCurdy, Economist at the Resolution Foundation, said: “The UK’s longstanding weakness in the jobs market has finally caught up with pay packets. The pace of wage growth finally fell below the rate of inflation over the summer. As a result, real weekly wages have grown by just £1.50 in total since last September – barely enough to cover the cost of a Greggs sausage roll. “The deteriorating labour market, coupled with persistently high inflation, means that cost of living pressures are likely to build over the Autumn.”
