Sage Monthly Workforce Pulse: May 2026

The Sage Workforce Pulse is based on data collected each month from approximately 200,000 small businesses with millions of employees across the UK. 

Key highlights 

• Median Gross earnings: +£2,203, Up 4.1% year-on-year 
• Median Net earnings +£1,804, Up 3.3% year-on-year 
• Headcount +0.3% Year-on-year 

The Sage SME Monthly Workforce Pulse indicates that headcount among surveyed small businesses increased by 0.3% year-on-year in May. Over the same period, median gross earnings rose by 4.1%, marking a further deceleration in pay growth. Small businesses continue to face a tough economic climate, with ongoing disruptions to global energy supplies keeping inflationary pressures elevated. A recently announced Iran-US deal to end the conflict and reopen the Strait of Hormuz should ease energy supply concerns, though reverberations from the shock will linger, and downside risks remain. Cebr forecasts GDP growth of just 0.9% in 2026, reflecting a broadly subdued outlook. Although wage growth is beginning to cool, hiring demand has been slow to recover, held back by persistent uncertainty around input costs and weakening demand. The Bank of England is likely to keep interest rates higher for longer, which will act as a further drag on business investment. Slowing pay growth is eroding real wages, and alongside an elevated unemployment rate, this is putting pressure on household incomes and consumer spending. With demand softening and cost pressures remaining elevated, business confidence is expected to stay fragile, limiting firms' willingness to expand their workforces for the rest of the year.

Liam Daly Senior Economist at Cebr

Earnings

Median gross earnings rose 4.1% year-on-year in May, continuing a downwards trend from 4.6% in April and 5.9% in May 2025. Meanwhile, median take-home pay (net) stood at £1,804, up 3.4% YoY. 

In May, nominal earnings grew by 4.1% year-on-year and Cebr projects that Consumer Price Index (CPI), rose by 3.0% in May. Inflation, measured by growth in the CPI index, affects the purchasing power of wages. Adjusted for inflation, real-terms earnings grew by 1.0% year-on-year. 

Regionally, London, the East of England and Northern Ireland had the lowest earnings growth at 2.7%, 3.0% and 3.1%, respectively and earnings rose most in Wales, increasing by 5.8%. Year-on-year changes in earnings growth varied more by industry than location. Earnings growth was highest in ‘wholesale and retail trade sector’, rising 4.5% YoY, and lowest in the ‘arts and entertainment industry’, falling by 0.2% YoY.

Headcount

Total headcount grew by 0.3% year-on-year in May, down from 0.6% in April. Year-on-year growth was highest in the East Midlands at 0.9% followed by the West Midlands and North West, both 0.7%; meanwhile those in Wales registered the largest declines of 0.4% in headcount. Scotland and Yorkshire & Humber were next, both recording 0.3% decreases.

Year-on-year changes in headcount varied widely by industry. Finance and insurance exhibited the greatest growth at 1.5%, while accommodation and food services saw the greatest decline at 1.4%.