Public sector pay

Recent developments

In July 2024, the Labour government accepted the recommendations of the Pay Review Bodies (PRBs), meaning that public sector employees will receive a pay increase of between 4.75% and 6% in the 2024/25 financial year, depending on occupation.

In the Autumn Budget 2024 policy paper, the government said it had started the PRB process three months earlier in the year than for 2024/25, and it expected the PRBs to deliver their recommendations for 2025/26 in spring 2025.
Pay awards were an average of 5% in 2022 and between 5% and 7% in 2023, in the context of high inflation.

In April 2025, the National Living Wage (NLW) for people over 21 will increase to £12.21. A different (lower) rate, the National Minimum Wage (NMW), applies for people under 21, with different rates for those aged 18 to 20 and those under 18. In July 2024, the government committed to removing the age 18 to 20 band for the NMW rates, meaning everyone over 18 would be eligible for the same NMW rate. The government has instructed the Low Pay Commission (LPC) to recommend a NMW rate that should apply to 18-to-20-year olds from April 2025, with the aim of incrementally increasing this rate year on year to eventually achieve a single adult rate.

How public sector pay is determined

The mechanism varies across the public sector:

• Pay awards for about 45% of the public sector – including the armed forces, the police, teachers, the Senior Civil Service and the NHS – are decided by government ministers and based on the recommendation of eight Pay Review Bodies (PRBs).
• Pay awards for the Civil Service are decided by individual departments based on guidance issued by the Cabinet Office.
• Pay awards for local government workers are agreed in negotiations between employers and trade unions through the National Joint Council for Local Government Services.
  For devolved public sector bodies, pay policy is set by the devolved administrations.

Trends in public sector pay

In April 2024, median weekly earnings for full-time employees in the public sector were 7% higher than those in the private sector. The gap had been narrowing before the pandemic but increased again in 2020, partly because of the private sector’s greater use of furlough (when employees were paid 80% of their usual salary while they were unable to work during lockdowns). The gap has been narrowing again since 2021.