Full-time pay dips below £40,000 ahead of tariff row as NIC hikes bite

Full-time pay took a hit in the first quarter of the year ahead of the Government’s NIC tax hike and the worsening international trade war.

Employment Hero’s April Jobs report uses real-time data from 105,000 employees across small and medium-sized businesses with 1-500 employees in the UK.

Data from the end of March showed median full-time pay dropped to £39,946, down from to £40,197 (0.6%) in December 2024.

This suggests that new hires were offered lower salaries, while existing employees saw their pay frozen, rather than facing actual pay cuts.

The decline in pay follows the Government’s October budget, which introduced tax reforms, including a higher NIC rate for employers.

Research suggests that these ‘jobs taxes’ are typically passed on to employees through lower pay.

Manufacturing pay falls ahead of tariff spat

The trade-exposed manufacturing, transport and logistics sector saw the biggest drop, with full-time pay declining each month in Q1 2025, resulting in an average decrease of -2.6% per month.

It’s likely that the manufacturing sector will be most impacted by the 10% tariffs imposed on the UK by the USA.

This is against a backdrop of sectors that saw an increase in pay, with the retail, leisure and hospitality sector seeing 2.3% growth and the banking, finance and insurance sector a 1.9% increase.

Kevin Fitzgerald, UK MD of Employment Hero said,”This is the first sustained drop in median full-time wages since we began tracking this data, which is very concerning for UK workers. The timing suggests that employers were preparing for changing employment costs by tightening their wage bills well in advance of April.”

“The manufacturing sector’s wage decline is particularly alarming and likely reflects multiple pressures – the National Insurance hike, ongoing economic uncertainty, and now the looming threat of US tariffs. These businesses are clearly making difficult decisions to maintain competitiveness in an increasingly challenging trade environment.”

“What’s most concerning is that workers are facing this wage stagnation at a time when living costs remain high. The drop below the £40,000 threshold is psychologically significant and may impact consumer confidence further in the coming months.”