The labour market is showing ongoing resilience despite a challenging economic climate but there is growing concern that the rising cost of employing staff is going to affect more and more employers causing a damaging impact on the market. The UK employment rate was estimated at 75.1% in December 2024 to February 2025. This is above estimates of a year ago, and up on the latest quarter. The UK unemployment rate was estimated at 4.4%, also above estimates of a year ago, but largely unchanged in the latest quarter.
The estimated number of vacancies in the UK in January to March 2025 was 781,000 – the 33rd consecutive quarterly decline. Employers are eagerly watching the progress of the Employment Rights Bill and the ensuing raft of employment legislation which will follow – undoubtedly encouraging employers to take a more cautious approach to recruitment.
Annual growth in employees’ average regular earnings excluding bonuses in Great Britain was 5.9% in December 2024 to February 2025, and annual growth in total earnings including bonuses was 5.6%. We are seeing many employers adopting pay freezes or minimal increases to help balance out the costs impact of the employer National Insurance contributions increase in April this year.
The employment market is currently facing extreme instability, driven by global political uncertainties and sweeping changes in employment laws. This volatility is particularly challenging for labour-intensive industries such as hospitality, retail, and manufacturing, which are likely to encounter a challenging period. As a result, implementing cost-cutting measures will become an unavoidable necessity for some.