UK reward metrics · Pay

Which annual pay budget setting factors do UK organisations use?

Source lumi HRBase 267 organisationsFieldwork 2026 H1

86.1%Affordability / budget constraints

86.1% of organisations in the lumi HR community selected “Affordability / budget constraints” for annual pay budget setting factors (base: 267 organisations, 2026 H1; organisations could select more than one).

Figures describe organisations in the lumi HR community, not a random sample of UK employers.

How UK organisations answered

Affordability / budget constraints 86.1% Inflation / cost of living 76% Market competitiveness 62.9% Organisational financial performance 56.6% Retention of critical talent 43.8% National Living Wage pressure 42.3% Collective bargaining outcomes 33% Other 3%
Annual pay budget setting factors (base: 267 organisations, 2026 H1). Organisations could select more than one, so the figures do not sum to 100%.
Annual pay budget setting factors: share of organisations by answer
AnswerShare of organisations
Affordability / budget constraints86.1%
Inflation / cost of living76%
Market competitiveness62.9%
Organisational financial performance56.6%
Retention of critical talent43.8%
National Living Wage pressure42.3%
Collective bargaining outcomes33%
Other3%

Definition

Top drivers used to set the organisation's annual pay budget. See the methodology for how the base is built, how not-applicable answers are handled, the public floor, and which organisations are excluded.

Cite this figure
Source: lumi HR, UK Reward Metrics, September 2026, lumihr.co.uk/metrics/annual-pay-budget-setting-factors
Last updated 19 September 2026 · Data licence: CC BY 4.0 for the figures in the CSV download.

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