Wages for full-time employees surged 1% in June, the most significant monthly increase since October’s Autumn Budget, signaling renewed momentum in SME wage growth.

The UK’s June 2025 Employment Hero Jobs Report reveals a notable resurgence in wage growth for full-time workers, with a 1% month-on-month rise, the strongest since the Chancellor’s Autumn Budget in October 2024. This uptick represents a hopeful signal for small and medium-sized enterprises (SMEs) and their employees amidst ongoing cost-of-living pressures.

Following a steep post-Budget dip in wage growth that bottomed out in January 2025 (-1.1% MoM), June’s figures suggest that SME employers are regaining the confidence to increase compensation. The data, drawn from 105,000 employees across 4,637 businesses, shows a 1.6% increase in wages over the past three months, supporting the view that the sector is stabilising.

The sharpest wage increases were seen among older generations. Boomer employees experienced a 4.6% rise compared to May, while Gen X saw a 1.9% uplift. Millennials saw modest gains of 0.6%. In contrast, Gen Z salaries fell by 0.2% MoM, highlighting a potential generational divide in pay growth trends.

London saw a significant 4% wage increase in June following three consecutive months of decline. This regional surge was primarily driven by full-time employment, which rose by 4%, offsetting a -1.8% decline in part-time and casual roles. Other regions like the Midlands and The North also posted strong quarterly and yearly gains, with salaries in The North up 11.1% YoY.

“After a rocky few months following the Autumn Budget and tax hikes in April, green shoots are finally starting to show across the SME industry,” says Kevin Fitzgerald, UK Managing Director at Employment Hero. “This uplift in pay will come as welcome relief to many workers feeling the pinch from cost-of-living pressures… The focus for small and medium-sized businesses must shift toward sustaining these gains and building long-term confidence.”

The data underscores a shift in hiring strategies, with SMEs increasingly valuing experience amid uncertain conditions. Employers may be prioritising stability and immediate productivity by investing in older workers, but this raises questions about long-term talent pipelines and support for younger employees.

“While it’s encouraging to see seasoned workers leading on salary growth, we must ensure younger generations like Gen Z aren’t left behind.” Fitzgerald urged. “They’re the future of the workforce and now’s the time to give them the support and opportunities even amid ongoing cost pressures.”

June’s report paints a cautiously optimistic picture. Sustained wage growth could improve employee retention and morale, but employers and policymakers must remain vigilant. With inflation still outpacing many pay increases, especially for younger generations, inclusive growth strategies will be critical to maintaining balance in the labour market.

The rebound in full-time wages marks a potential turning point for the UK’s SME sector. As businesses continue to navigate economic headwinds, the focus must be on translating these short-term gains into longer-term resilience, ensuring fair pay across all demographics and regions.