Wage growth plateaus but remains strong, while vacancy levels continue to dip.
In the three months to March 2025, wage growth across the economy remained strong and, while wages continued to rise in nominal and real terms, the rate of wage growth is showing signs of slowing. Unemployment and employment levels have both risen again, and the economic inactivity figure fell but still sits above 9 million. The labour market picture, therefore, remains the same, and the challenge of supporting people to enter and stay in the labour market continues to be a top priority.
The UK employment rate (for people aged 16 to 64 years) was estimated at 75.0% in the period between January 2025 and March 2025, which is unchanged on the quarter but slightly up on the year. The UK unemployment rate (for people aged 16 and over) was estimated at 4.5% in the three months to March 2025, which is slightly up on the year and the quarter.
The UK economic inactivity rate for people aged 16 to 64 years old was 21.4% in the quarter to March 2025, marginally down on the year and the quarter. The provisional estimate for the number of vacancies in the UK economy in the three months to April 2025 is 761,000, which is a decrease on the quarter (-42,000) and the year (-131,000).
Estimates for payrolled employees in the UK decreased by 47,000 (0.2%) between February and March 2025 and fell by 63,000 (0.2%) between March 2024 and March 2025. The early estimate of payrolled employees for April 2025 decreased by 33,000 (0.1%) on the month and decreased by 106,000 (0.3%) on the year to 30.3 million. The April 2025 estimate should be treated as a provisional estimate and is likely to be revised when more data is received next month.
Annual growth in employees' average regular earnings (excluding bonuses) in Great Britain was 5.6% in the three months to March 2025, and annual growth in total earnings (including bonuses) was 5.5%. Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH)), for regular pay and total pay stood at 1.8% and 1.7%, respectively, across the same period.
The data from this month does not tell a drastically different story from the one told in previous months. Wage growth has continued to plateau, but questions remain about how affordable the current rate of wage growth is for businesses if there is not the productivity growth to pay for it. Employment and unemployment levels also rose again, suggesting the retention of talent continues to be a top challenge, and the sustained decline in vacancy levels has persisted, suggesting the jobs market is in fact weakening.
Together, this indicates that the rising cost of employment, from the National Insurance Contributions (NICs) hike to the knock-on effects of tariffs, are affecting hiring decisions and crowding out the budgets that firms have to invest in growth and their workforce. The priority remains for policymakers to work with employers to unlock business investment and reduce costs which do not support employers' growth potential. For example, delivering immediate and meaningful reform of the Apprenticeship Levy and working through the unintended consequences of the Employment Rights Bill. Some of this concern could be addressed through relatively small changes, such as replacing the 'right to have' a guaranteed hours contract with a 'right to claim' or a 'right to request', as well as making the distinction between unreasonable and reasonable contractual changes clearer in fire/re-hire provisions.
