Labour Market Overview, UK: February 2025

The latest data on the UK labour market shows a mixed picture, with small fluctuations in employment, a continued rise in wages, and ongoing declines in job vacancies. While employment has improved, unemployment and the Claimant Count remain elevated, signalling some challenges ahead.

Payrolled Employees: Small Shifts in Employment

Between November and December 2024, payrolled employees in the UK decreased by 14,000 (0.0%), but on an annual basis, they rose by 44,000 (0.1%).

For the three-month period from October to December 2024, payrolled employees fell slightly by 3,000 (0.0%), though they increased by 106,000 (0.3%) compared to the previous year.

Early estimates for January 2025 suggest a modest increase of 21,000 (0.1%) on the month and a yearly rise of 49,000 (0.2%), bringing the total to 30.4 million. However, this figure is provisional and may be revised as more data becomes available.

Employment, Unemployment, and Economic Inactivity

• Employment Rate: The employment rate for people aged 16 to 64 years reached 74.9% in October to December 2024, showing an improvement over the year and a slight increase from the previous quarter.
• Unemployment Rate: The unemployment rate remained at 4.4%, up both on the year and the quarter, suggesting some softening in the labour market.
• Economic Inactivity Rate: The rate of economic inactivity among people aged 16 to 64 fell to 21.5%, marking a decline both on the year and the quarter as more individuals returned to work.

While the employment rate is rising, the increase in unemployment suggests that more people are seeking jobs but not all are securing employment, pointing to potential labour market imbalances.

Job Vacancies: 31st Consecutive Decline

The number of job vacancies in the UK continued to decline, dropping by 9,000 in the three months to January 2025, bringing the total to 819,000.

This marks the 31st consecutive period of falling vacancies. However, despite the ongoing decline, vacancy levels remain higher than pre-pandemic figures, indicating that demand for workers persists, albeit at a slowing rate.

Wage Growth: Strong Increases in Earnings

Wages continued their strong upward trend:

• Regular Pay: Earnings excluding bonuses grew by 5.9% annually from October to December 2024.
• Total Pay: Including bonuses, earnings rose by 6.0%, reflecting solid wage growth.

When adjusted for inflation (CPIH), real wages also showed positive gains, with both regular and total pay rising by 2.5%. These figures suggest that workers are seeing meaningful increases in their take-home pay, helping to counteract cost-of-living pressures.

Labour Disputes and Claimant Count

• Labour Disputes: December 2024 saw an estimated 52,000 working days lost due to labour disputes, reflecting continued tensions in pay negotiations across various sectors.
• Claimant Count: The number of people claiming unemployment-related benefits rose to 1.750 million in January 2025, increasing both on the month and the year.

The rise in the Claimant Count aligns with the increase in unemployment, indicating that some job seekers are struggling to find work despite overall employment growth.

Conclusion

The UK labour market in early 2025 presents a complex landscape. While employment is rising, unemployment and the Claimant Count have also increased, suggesting that not all job seekers are finding positions. The decline in job vacancies for the 31st consecutive period highlights a cautious hiring environment, but wage growth remains strong, providing workers with increased financial stability.

Looking ahead, the balance between rising wages, declining vacancies, and increasing unemployment will be key in determining the direction of the labour market in the coming months.

Vacancies and jobs in the UK: February 2025

• The estimated number of vacancies was 819,000 in the UK in November 2024 to January 2025; this is a decrease of 9,000, or 1.1%, from August to October 2024.
• Vacancy numbers decreased on the quarter for the 31st consecutive period in November 2024 to January 2025, with quarterly decreases in 11 of the 18 industry sectors.
• Total estimated vacancies were down by 110,000 (11.8%) in November 2024 to January 2025 from the level of a year ago; however, they remained 23,000 (2.9%) above their pre-coronavirus (COVID-19) pandemic January to March 2020 levels.
• The number of unemployed people per vacancy was 1.9 in October to December 2024, up by 0.1 from 1.8 in the previous quarter (July to September 2024).

Office for National Statistics (ONS), released 18 February 2025, ONS website, statistical bulletin, Labour market overview, UK: February 2025