Wage growth stabilises but remains strong, while youth unemployment continues to climb.
Learn about the latest trends in the labour market.
In the quarter to January 2025, wage growth across the economy remained strong, unemployment and employment levels increased, and economic inactivity has continued to fall but remains high. The picture of the labour market therefore remains broadly unchanged, with accessibility to skills and talent continuing to rank as a top threat to businesses' sustainability and ability to realise their full growth potential.
The UK employment rate (for people aged 16 to 64 years) was estimated at 75.0% in the period between November and January 2025, 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 the three months to January 2025, which is also up 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 January 2025, marginally down on the year and the quarter.
The estimated number of vacancies in the UK increased by 1,000 to 816,000 in the period between December 2024 to February 2025. There are 98,000 fewer vacancies compared to this time last year.
Estimates for payrolled employees in the UK increased by 9,000 (0.0%) between December 2024 and January 2025 and rose by 44,000 (+0.1%) between January 2024 and January 2025. The early estimate of payrolled employees for February 2025 increased by 21,000 (+0.1%) on the month and increased by 66,000 (+0.2%) on the year to 30.4 million. The February 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 5.9% in the quarter to January, and annual growth in total earnings (including bonuses) was 5.8%. 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 2.2% and 2.1%, respectively, across the same period.
Some of the labour market changes that have been observed over the past few months, including climbing wage growth, are showing signs of abating. Other stories, such as rising levels of youth unemployment and drops in economic inactivity, have continued. However, the key message remains the same: the UK labour market continues to pose fundamental challenges to UK employers and a new partnership between business and government is needed to help unlock productivity-led growth. It is therefore critical that the Chancellor uses the time before the Spending Review to identify and understand the barriers which are holding back firms' ability to grow and respond to new business opportunities. This should involve working through the unintended consequences of the Employment Rights Bill and proposed plans to defund Level 7 apprenticeships from the Apprenticeship Levy.
