Labour market overview, UK: July 2025
Estimates for payrolled employees in the UK fell by 135,000 (0.4%)
between May 2024 and May 2025, and by 25,000 (0.1%) between April
and May 2025. When looking at March to May 2025, the period
comparable with our Labour Force Survey (LFS) estimates, payrolled
employees fell by 81,000 (0.3%) over the year, and by 68,000 (0.2%)
over the quarter. The early estimate of payrolled employees for
June 2025 decreased by 178,000 (0.6%) on the year, and by 41,000
(0.1%) on the month,...Request free
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Estimates for payrolled employees in the UK fell by 135,000 (0.4%) between May 2024 and May 2025, and by 25,000 (0.1%) between April and May 2025. When looking at March to May 2025, the period comparable with our Labour Force Survey (LFS) estimates, payrolled employees fell by 81,000 (0.3%) over the year, and by 68,000 (0.2%) over the quarter. The early estimate of payrolled employees for June 2025 decreased by 178,000 (0.6%) on the year, and by 41,000 (0.1%) on the month, to 30.3 million. The June 2025 estimate should be treated as a provisional estimate and is likely to be revised when more data are received next month. LFS estimates from January to March 2025 include the full effect of recent improvements in LFS data collection and sampling methods introduced from January 2024, and are therefore more likely to be representative of labour market conditions. An increased amount of volatility will remain in the LFS estimates from mid-2023 and throughout 2024, so we would advise caution when interpreting change involving those periods. We recommend using LFS estimates as part of our suite of labour market indicators, alongside workforce jobs, Claimant Count and Pay As You Earn (PAYE) Real Time Information (RTI) estimates. The UK employment rate for people aged 16 to 64 years was estimated at 75.2% in March to May 2025. This is above estimates of a year ago, and up in the latest quarter. The UK unemployment rate for people aged 16 years and over was estimated at 4.7% in March to May 2025. This is above estimates of a year ago, and up in the latest quarter. The UK economic inactivity rate for people aged 16 to 64 years was estimated at 21.0% in March to May 2025. This is below estimates of a year ago, and down in the latest quarter. The UK Claimant Count for June 2025 increased on the month and the year, to 1.743 million. The estimated number of vacancies in the UK fell by 56,000 on the quarter, to 727,000, in April to June 2025. This is the 36th consecutive period where vacancy numbers have dropped compared with the previous three months, with vacancies decreasing in 14 of the 18 industry sectors. Feedback from our Vacancy Survey suggests some firms may not be recruiting new workers, or replacing workers who have left. In March to May 2025, annual growth in employees' average earnings in Great Britain for both regular earnings (excluding bonuses) and total earnings (including bonuses) was 5.0%. Annual average regular earnings growth was 5.5% for the public sector and 4.9% for the private sector. RTI pay data is also published and provides a provisional, timelier estimate of median pay. The two data sources generally trend well for mean total pay. Annual growth in real terms, adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH), was 1.1% for regular pay and 1.0% for total pay in March to May 2025. Annual growth in real terms, adjusted for inflation using the Consumer Prices Index excluding owner occupiers' housing costs (CPI), was 1.8% for regular pay and 1.7% for total pay in March to May 2025. There were an estimated 37,000 working days lost because of labour disputes across the UK in May 2025. Responding to the latest labour market data, published by the ONS this morning, Jane Gratton, Deputy Director Public Policy at the British Chambers of Commerce said: “The ONS data suggests that the jobs market is continuing to loosen as unemployment rises, vacancies fall again, and wage growth slows. However, pay rises are still outpacing inflation, and employment costs pressure is continuing to erode firms' operating margins. “The steep increases in national insurance and the national living wage loom large over this data. Our research shows that recruitment remains challenging, and businesses cite labour costs as the biggest pressure. “Firms will also be wary of plans announced this week for a review of pension auto-enrolment contributions which could lead to further cost burdens. This mounting financial pressure, alongside pervasive skills shortages, remains a massive challenge for business, presenting big risks to investment and productivity. “The £5bn cost associated with the employment rights bill also poses a further threat to firms' investment plans. Without further amendment, the legislation will add even more to employers' costs. “The BCC's Blueprint for Growth sets out a series of practical policy proposals to address these issues. Improving apprenticeships and tackling workplace health investment are crucial to help restore balance in the labour market. “Firms also want to see real-world progress on the government's economic strategies, movement on global trade talks and no further tax rises on them to restore business confidence.” Responding to the latest ONS labour market data, Alex Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors, said: “Today's data reflects a softening labour market, with payrolled employees decreasing on the month by 0.1% (0.6% on the year) and vacancies down by 63,000 on the quarter. “This continued slump in the demand for labour is the predictable result of a series of policy blows to the case for hiring staff. The cumulative impact of the increase in Employer National Insurance Contributions, the Employment Rights Bill, and above-inflation increases to the National Living Wage has been to significantly increase the costs and risks associated with employing staff. “With IoD research showing that more business leaders plan to reduce their employee headcount over the next year than increase it, this situation is unlikely to improve any time soon. “A significant rethink is needed if the government is to meet its aims of driving economic growth and increasing the employment rate. The government's commitment to consult on the detail of secondary legislation associated with the Employment Rights Bill is welcome, but will have no effect on hiring unless it is genuinely used to listen to and address the concerns of employers.” Commenting on today's (Thursday) labour market data, which show some tentative improvements alongside ongoing challenges, TUC General Secretary Paul Nowak said: “Fragilities in the jobs market have been long in the making and are another toxic Tory legacy. “It is good to see youth unemployment falling and falling rates of economic inactivity, but the jobs market remains far from full health and living standards are still under pressure. “There is no overnight fix to these long-term issues. But after years of Conservative cuts we finally have a government which is investing in public services, infrastructure and skills. “The Bank of England must offer a helping hand instead of keeping interest rates high – another rate cut would ease the pressure on household budgets and make it more affordable for businesses to invest. “It's also vital we see sustained investment in the services that support people to move into and stay in work – particularly young people who need genuine opportunities to learn and earn as they start their careers.” |