Regular wage growth continues to climb, while employment and unemployment levels increase
Learn about the latest trends in the labour market.
In the quarter to December 2024, wage growth across the economy remained strong, unemployment and employment levels increased, and economic inactivity marginally fell but remains high. This paints the same picture of the labour market as described in recent months, with hiring expectations cooling but the challenges associated with accessing new skills and talent remaining a top threat to growth.
The UK employment rate (for people aged 16 to 64 years) was estimated at 74.9% in the period between October and December 2024, which is slightly up on the quarter and the year. The UK unemployment rate (for people aged 16 and over) was estimated at 4.4% in October and December 2024, which also represents a moderate increase on the quarter and the year.
The UK economic inactivity rate for people aged 16 to 64 years was estimated at 21.5% in the quarter to December 2024, marginally down on the year and the quarter.
The estimated number of vacancies in the UK decreased by 9,000 to 819,000 in the period between November 2024 and January 2025. This represents the 31st consecutive quarterly decline in the number of positions employers are actively recruiting for from outside of their business.
Payrolled employees in the UK decreased by 3,000 (0.0%) between October and December 2024 but rose by 106,000 (+0.3%) between December 2023 and December 2024. The early estimate of payrolled employees for January 2025 increased by 21,000 (+0.1%) and 49,000 (+0.2%) on the month and year, respectively, to 30.4 million. This figure 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 5.9% in the quarter to December, and annual growth in total earnings (including bonuses) was 6.0%. 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 both stood at 2.5% across the same period.
There are some new stories emerging through the labour market data, including an uptick in regular wage growth (despite productivity decreasing on the quarter due to a reduction in the total hours worked), and the plateau in vacancy levels which have been falling since the pandemic. However, the overarching message stays unchanged: policymakers must work with businesses to identify levers which can help drive productivity, as simply recruiting more people into the labour market cannot be relied on as the mechanism to drive growth. Businesses will be looking to the Government to use the time between now and the Spending Review to engage with the challenges holding back firms’ ability to make productivity-enhancing investments. This includes continued rigidity in how the Apprenticeship Levy can be spent and the risk of huge compliance costs presented by the Employment Rights Bill.
