What’s the average pay rise in 2025? Key trends across Europe
Understanding average pay rises provides crucial context for Reward Leaders when it comes to compensation review plans.
It’s key to accurate budget planning – enabling teams to understand how pay rises will impact overall payroll costs.
And it’s also key for keeping employee compensation competitive, by understanding the changes the rest of the market are making to support employee pay progression.
After all, if most companies are giving employees an average 10% pay rise, suddenly your salaries may seem less attractive for existing employees and potential job candidates – which is why making market adjustments based on up-to-date benchmarking data should always be part of every pay review.
So, to help, in this article we’ll take a look at insights on average salary increases from Ravio’s extensive compensation database.
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Expected salary increases in 2025
Average pay rise in 2025 – overall
In 2025, the average salary increase is projected to be 5%.
This is according to Ravio’s salary data (correct as of March 2025), which contains over 300,000 data points from over 1,000 companies across Europe. It’s a rolling average, which means it represents the average salary increase employees have received in the last 12 months i.e. March 2024 to March 2025.
This also aligns with our latest survey. In October 2024 we surveyed 700+ People and Reward Leaders about their expectations for salary increases at their company’s next pay review in 2025.
The responses indicate that most companies expected to grant employees between a 2-6% salary increase at the next compensation review – with the most common responses being a 3-4% pay rise (31% of companies) or a 4-5% pay rise (24% of companies).
These figures provide insights into the overall average pay rise in Europe in 2025 – but, of course, there are always nuances within that. In the following sections we’ll break it down by country, job function, and company size.
Average pay rise in 2025 – per country
Whilst the average salary increase overall in 2025 sits at 5%, there are slight differences in different countries in Europe.
For companies that hire internationally, this is important to understand, as employees in different locations may have different expectations in terms of keeping pay competitive with the market.
From Ravio’s data we can see that most countries have seen a slight decline in the average pay rise for 2025, with Spain having seen a particular decrease from 6.6% last year to 4% this year.
On the other hand, employees in the Netherlands can expect particularly high salary increases in 2025, with the average pay rise at 7.5% this year.
Here’s the breakdown across a few core markets in Europe:
- UK average salary increase: 5%
- France average salary increase: 5.5%
- Germany average salary increase: 5.3%
- Netherlands average salary increase: 7.5%
- Spain average salary increase: 4%
- Sweden average salary increase: 4%
Ravio survey data on how many companies use a merit matrix
Average pay rise in 2025 – per job function
From Ravio’s data we can see that there are slight differences in the average pay rise across different job functions.
Finance teams can expect a slightly higher salary increase in 2025, whereas commercial teams may have a lower salary increase – though also worth noting that commercial teams more often have variable pay included in their total compensation package.
All cited job functions have seen a slight decrease in the average pay rise this year compared to last year (March 2023 to March 2024) – with the exception of Finance, which has stayed consistently at 5%.
Here’s the breakdown across a few core job functions (more can be found in Ravio’s platform):
- Software Engineering average salary increase: 4.9%
- Product average salary increase: 5%
- People average salary increase: 5.1%
- Commercial average salary increase: 4.6%
- Marketing average salary increase: 5%
- Finance average salary increase: 5.3%
Salary increases overview
💡 How important are annual salary increases for hiring and retention?
As part of the survey for our latest Compensation Trends report, we asked People and Reward Leaders about the biggest challenges they face in hiring and retention.
In both cases, compensation is a top challenge.
In terms of hiring, 69% of European tech companies cited uncompetitive compensation as their top barrier to attracting talent. This ranks higher than issues like competitive benefit packages (32%) and a weak employer brand (27%).
With retention, compensation was the second most commonly cited challenge when it comes to keeping great talent within the business – with career progression being the #1 challenge.
It’s clear from this that ensuring that compensation remains competitive is absolutely crucial to meeting both hiring and retention goals.
Annual salary increases (or even more often than that) are vital levers to keep employee compensation aligned with the market, and to recognise and reward their progression within their role.
Average pay rise in 2025 – per company size
Interestingly, Ravio’s data shows that in 2025 there is no difference in average salary increase depending on company size.
Companies with a small headcount (less than 100 employees), mid-sized (100-500 companies), and large headcount (500+ employees) all have an average 5% salary increase between March 2024 and March 2025.
In 2024, employees at large companies were likely to receive a larger salary increase than those at smaller companies.
This shift could reflect tightening budgets at larger companies, whilst smaller companies tend to already be more conservative when it comes to compensation reviews.
Ravio survey data on the average expected salary increase in 2025
💡 Do most companies include performance in annual salary increases?
The Ravio data included in this article reflects the yearly percentage pay increase that employees receive within their current role, independent of promotions or changes in role.
This includes both pay increases companies give to keep pay aligned with market benchmarks (market adjustments) and pay increases companies give to reward employee performance and progression (merit increases) – but, of course, how companies balance these elements varies from company to company.
As part of our latest Compensation Trends survey, we asked 700+ People and Reward Leaders whether they include performance within salary increases. 79% of responses indicated that performance is a key factor in salary increases – 41% see performance as the primary factor, and 38% adjusting for market changes as well as performance.
One of the most common approaches is to use a merit matrix to balance performance-based increases with market adjustments and internal pay equity.
The merit matrix uses two inputs for this: performance rating, and compa ratio. The compa ratio enables inequities and inconsistencies to be fixed during the pay review by highlighting the employee’s existing salary band position. It also enables market changes to be reflected, if the underlying benchmarks used to determine salary ranges are first updated in line with market data.
In the same survey, we asked People and Reward Leaders whether they use this approach, and found that 49% do use a merit matrix to determine salary increases.
How do salary increases in 2025 compare to previous years?
The average pay rise in 2024
In 2024 the average salary increase was 5.5% – slightly higher than the average in 2025 of 5%, which could indicate tighter salary increase and payroll budgets this year.
This is a rolling average based on the 12 months between March 2023 and March 2024, taken from Ravio’s market trends data.
Salary increases across company growth stage
The average pay rise in 2023
In 2023 the average salary increase was 4.8% – as per Ravio’s Compensation Trends report for 2023-4. This marked a particular decline for salary increases compared to 2022, when the average salary increase in Europe was 8.0%. 8% is a high salary increase, so this could have been more of a resettling than a straightforward decline.
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