Labour Market Overview, UK: January 2025

Tuesday, January 21, 2025

The UK labour market at the start of 2025 shows a mix of growth and challenges, with declining payrolled employees in the short term, robust annual wage growth, and ongoing drops in job vacancies. The employment rate remains steady, while unemployment has seen a slight rise.

Payrolled Employees

Between October and November 2024, payrolled employees decreased by 32,000 (0.1%), though they rose by 95,000 (0.3%) compared to November 2023.

From September to November 2024, payrolled employees fell slightly by 11,000 (0.0%) over the quarter but increased by 134,000 (0.4%) year-on-year.

Provisional estimates for December 2024 indicate a monthly drop of 47,000 (0.2%) and a yearly decline of 8,000 (0.0%), bringing the total to 30.3 million. These estimates are subject to revision as more data becomes available.

Employment, Unemployment, and Economic Inactivity

  • Employment Rate: The employment rate for people aged 16 to 64 years was 74.8% in September to November 2024, showing little change from a year ago but a small decrease on the quarter.
  • Unemployment Rate: The unemployment rate rose to 4.4%, up on both the quarter and the year.
  • Economic Inactivity Rate: The economic inactivity rate for people aged 16 to 64 fell to 21.6%, showing improvements on both the year and the quarter. This reflects continued re-engagement of individuals with the labour market.

Job Vacancies

The estimated number of job vacancies dropped by 24,000 in the three months to December 2024, falling to 812,000. This marks the 30th consecutive quarter of decline. Despite the prolonged decrease, vacancy levels remain above pre-pandemic figures, highlighting persistent labour demand.

Earnings Growth

Wages continue to grow strongly:

  • Regular Pay: Average earnings excluding bonuses grew by 5.6% annually in September to November 2024.
  • Total Pay: Including bonuses, earnings also rose by 5.6%.

Real pay, adjusted for inflation using the CPIH, saw growth of 2.5% for regular pay and 2.4% for total pay. These figures indicate improved purchasing power for workers as wage growth outpaces inflation.

Labour Disputes

November 2024 saw 51,000 working days lost due to labour disputes, reflecting ongoing challenges in negotiations over pay and conditions in certain sectors.

Claimant Count

The UK Claimant Count rose slightly in December 2024 to 1.744 million, an increase both on the month and the year. This rise aligns with broader trends of increasing unemployment and cautious hiring practices.

Conclusion

The UK labour market entering 2025 highlights both resilience and areas of concern. Year-on-year growth in payrolled employees and strong wage increases signal positive momentum, while falling job vacancies and rising unemployment suggest caution among employers.

Real wage growth continues to provide relief for workers, though labour disputes and a rising Claimant Count underline the unevenness of the recovery. The next few months will be critical for understanding how the balance between employment, wages, and labour market activity evolves.

Vacancies and jobs in the UK: January 2025

  • The estimated number of vacancies was 812,000 in the UK in October to December 2024; this is a decrease of 24,000, or 2.9%, from July to September 2024.
  • Vacancy numbers have been decreasing for two and a half years, with quarterly decreases in 10 of the 18 industry sectors in October to December 2024.
  • Total estimated vacancies were down by 118,000 (12.7%) in October to December 2024 from the level of a year ago; however, they remained 16,000 (2.0%) above their pre-coronavirus (COVID-19) pandemic January to March 2020 levels.
  • The number of unemployed people per vacancy was 1.9 in September to November 2024, up by 0.2 from 1.7 in the previous quarter (June to August 2024).

 

Office for National Statistics (ONS), released 21 January 2025, ONS website, statistical bulletin, Labour market overview, UK: January 2025

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