Half of employees aged under 34 not expecting a pay rise in 2026

Even as employees call on their employers for help with the spiralling cost of living, many anticipate a real-terms reduction in pay this year. According to new research from Zest, half of younger workers expect no pay rise in 2026, while even more don’t expect an end-of-year bonus.

With the fallout of the US’ chaotic intervention in Iran still unclear, and the Strait of Hormuz either remaining closed, global oil prices look set to soar in the coming months – as winter approaches. Amid this – and the further inflation households anticipate from the related costs this will incur in other essential products – UK workers are turning to their employers for support.

Employee benefits platform Zest recently found that 49% of staff in Britain were concerned by escalating energy bills – and 41% called on more financial support from their employers to manage those spikes. But just months later, the firm has carried out a second poll, which suggests that employers may be further in the opposite direction – especially for young staff, who on average are already on lower salaries.

Despite soaring energy bills increasing financial pressure on UK adults, 47% of employees aged 18-34 years old are not expecting a pay rise this year. Meanwhile, 55% expect they will not receive a bonus at the end of 2026.

While bosses look to shore up their bottom lines at the expense of these workers – who they have also spent recent years threatening with a (yet to actually materialise) AI job-apocalypse which would replace anyone asking for a liveable salary – they may be shooting themselves in the foot here. According to Zest, the move potentially alienates the future talent who companies will ultimately rely upon to become its future leadership. To that end, 64% of younger employees told Zest they would consider leaving their jobs if their employer was unable to increase salaries.

With the recent energy price cap rise, which saw average yearly bills jump by £221 to hit almost £1,900, financial support is also becoming even more of a priority. Overall, 66% of employees are now calling for more financial support from their employer, with employer contributions to energy bills ranked one of the most popular benefits. But many reward strategies require major improvement – and 53% of younger employees think their benefits package is inadequate and 74% want their employer to invest more in their benefits offering.

Joy Waugh, principal consultant at Zest, commented, “As pay rises continue to lag behind, amid rising living costs and energy bill spikes, employees are demanding greater financial support from their employers through their reward packages. Offering effective rewards to all employees, especially younger workers, is key to not only boosting morale and performance but also supports with talent attraction and retention. For employers, it’s vital that they boost employee communication and engagement to understand what support employees are calling for, deliver this seamlessly and ensure that the workforce is accessing this. Failure to do so ultimately curbs commercial performance and growth.”