Payrolled Employment Flatlines Amid Ongoing Weakness
The latest September 2025 labour market figures show another month of stagnation for UK employment, underscoring ongoing challenges for recruiters. Between July 2024 and July 2025, the number of payrolled employees fell by 142,000 (0.5%), with only a small month-on-month decline of 6,000 (0.0%).
Looking at the May to July 2025 period, payrolled employees were down 125,000 year-on-year (0.4%) and 51,000 over the quarter (0.2%). Early estimates for August 2025 paint a similar picture, with a further 127,000 drop on the year and 8,000 on the month, bringing the total to 30.3 million.
For recruiters, these figures reflect a labour market struggling to generate momentum, with fewer openings to balance a steady flow of candidates.
Vacancies Continue Historic Decline
The vacancy count fell by 10,000 (1.4%) in the three months to August 2025, bringing the total to 728,000. This marks the 38th consecutive quarterly decline, with drops seen across nine of 18 industry sectors.
While vacancies remain above pre-pandemic levels, the sustained contraction suggests firms are still reluctant to expand headcount or replace leavers. For the recruitment industry, this translates into a more competitive environment for placements.
Employment Rate Up, Candidate Pool Expands
Interestingly, the employment rate rose to 75.2%, up on both the quarter and the year. Meanwhile, the unemployment rate climbed to 4.7%, also higher than last year. The economic inactivity rate fell to 21.1%, indicating more people are returning to the labour market.
For recruiters, this means an expanding candidate pool, but in a market where demand from employers remains weak.
Earnings Growth Slows, Public Sector Outpaces Private
Earnings growth cooled slightly, with regular pay up 4.8% and total pay up 4.7%. In real terms (adjusted for CPIH inflation), growth was modest at 0.7% for regular pay and 0.5% for total pay.
Public sector pay growth, at 5.6%, outpaced the private sector’s 4.7%, suggesting public service recruitment may hold stronger opportunities.
Recruitment Outlook: Navigating a Tough Market
The data underscores the difficult environment for recruiters: vacancies shrinking, employers cautious, and wage growth softening. However, with more candidates entering the labour market, agencies that focus on sector specialisms, efficient candidate matching, and strong employer partnerships will be best placed to weather the slowdown.
Vacancies and jobs in the UK: September 2025
- The estimated number of vacancies in the UK fell by 10,000 (1.4%) on the quarter, to 728,000 in June to August 2025.
- This is the 38th consecutive period where vacancy numbers have dropped compared with the previous three months, with vacancies decreasing in half of the 18 industry sectors.
- Total estimated vacancies were down by 119,000 (14.0%) in June to August 2025 from the level of a year ago, and are 67,000 (8.4%) below their pre-coronavirus (COVID-19) January to March 2020 level.
- The number of unemployed people per vacancy was 2.3 in May to July 2025; this is up from 2.2 in the previous quarter (February to April 2025).
- The estimated number of workforce jobs in the UK was 36.8 million in June 2025; this is a decrease of 182,000 (0.5%) from March 2025, with decreases of 3,000 (0.0%) in the employee jobs component and 159,000 (3.7%) in the self-employment jobs component.
- The estimated number of workforce jobs was up by 139,000 (0.4%) in June 2025 from the level of a year ago; human health and social work activities had the largest increase of 68,000 (1.3%).
Office for National Statistics (ONS), released 16 September 2025, ONS website, statistical bulletin: Labour market overview, UK: September 2025
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