The Office for National Statistics' Annual Survey of Hours and Earnings (ASHE), published on 22 October 2026, recorded median full-time weekly earnings of £811.20 in April 2026, a 5.8% rise from £766.60 a year earlier. For reward committees finalising 2027 pay budgets, that headline is deceptively comfortable: the distribution beneath it reveals a labour market pulling apart at both ends, with mounting statutory cost pressure concentrated precisely where employer appetite for settlement is weakest.

A two-speed pay market

The ASHE data shows full-time pay at the 90th percentile growing 7.0%, the largest proportional increase across the entire full-time distribution. At the same time, median weekly earnings across all employees rose 4.9%, and part-time median weekly earnings climbed just 2.9%, partly because part-time hours fell in the period. For HR Directors benchmarking total reward, the gap between senior and entry-level pay trajectories is not just a fairness consideration: it feeds directly into the differential compression problem that tends to surface in exit interviews rather than payroll reports.

The share of employee jobs classed as high-paid, defined by the ONS as hourly earnings above £28.50, edged from 23.4% to 23.7%. Meanwhile, the proportion in low pay rose from 2.6% to 2.8%. Both shifts are modest in isolation; together they signal a distribution that is spreading rather than converging. The CIPD's annual UK Reward Management Survey data is worth reviewing alongside these figures: the institute's tracking of profit-share and variable-pay take-up offers a useful counterpoint to the statutory picture for organisations operating above the floor.

One proviso before committing these numbers to a board slide: the ONS flags all 2026 ASHE estimates as provisional, with final figures scheduled for publication in October 2027.

The statutory floor sits within pence of the low-pay line

The ONS defines low pay as hourly earnings below two-thirds of the median. With median hourly earnings at £19.00 in April 2026, that threshold was £12.67. The National Living Wage (NLW), set under the National Minimum Wage Act 1998 for workers aged 21 and over, stood at £12.71 in April 2026, up from £12.21 in April 2025: a margin of just 4p above the low-pay line.

The practical consequence is visible in the shape of the distribution itself. The peak of the hourly earnings curve was approximately £12.90, clustered tightly around the NLW. For a substantial proportion of employers in entry-level and service sectors, the statutory rate functions not as a theoretical backstop but as the operative going rate. That concentration has direct implications for payroll modelling: any uprating of the NLW ripples through a large share of the workforce simultaneously.

The ONS also estimates that 346,000 jobs, representing 1.1% of total employee jobs, were paid below the applicable minimum rate in April 2026. The statistics office is explicit that this is not a direct measure of non-compliance, partly because survey data cannot always confirm which rate a given worker is entitled to. Even so, it is a prompt for payroll teams to audit edge cases: the National Minimum Wage Act 1998 applies age-banded rates, and the rate for workers aged 18 to 20 was £10.85 in April 2026. ACAS (the Advisory, Conciliation and Arbitration Service) publishes guidance on calculating the correct rate across worker categories, including those on irregular hours or output-based contracts, where underpayment risk is highest.

The Resolution Foundation, responding to the same release, noted that the share of workers in low pay failed to fall for the first time in 15 years. Above the statutory floor, the voluntary Real Living Wage stood at £13.45 outside London and £14.80 in London, rates set independently by the Living Wage Foundation.

Pricing the April 2027 uprating

The Low Pay Commission's 2026 consultation, conducted under a government remit published on 16 March 2026, put the probable range for the April 2027 NLW at £13.02 to £13.34. That range was set before the latest ASHE figures were released. Analysis by the Financial Times of the new ONS data suggests the pay floor would need to rise by more than 5% to remain at two-thirds of median earnings. Applied to the current £12.71 rate, a 5% rise produces approximately £13.35, at or marginally above the top of the Commission's spring range.

For HR teams, the mismatch between that trajectory and employer pay intentions is the central planning problem. Only 22% of businesses surveyed by the Work Foundation at Lancaster University intended above-inflation pay rises in the current cycle. If the statutory floor rises by 5% or more while the broader workforce settlement remains below inflation, the differential between entry-level, supervisory and skilled roles compresses. That compression rarely appears as a discrete budget line: it tends to surface when team leaders discover they earn only a few pence an hour more than the colleagues they manage, and it often precedes turnover in middle-grade operational roles before it registers in aggregate attrition data.

Where retention pressure concentrates

Exposure to low pay is distributed unevenly across the workforce. The ONS data shows low pay accounting for 16.3% of jobs in accommodation and food services and 11.5% in elementary occupations. Among younger workers, 33.6% of employees aged 16 to 21 were in low pay, and part-time staff were five times more likely than full-time staff to be in that bracket: 6.6% versus 1.3%. Regional variation is equally pronounced: Northern Ireland's low-pay share was 4.0%, while 42.5% of jobs in London were classified as high-paid.

Aman Navani, senior research and policy analyst at the Work Foundation at Lancaster University, framed the structural risk for affected sectors in these terms: