Responses to ONS unemployment statistics

Conservative response to ONS unemployment statistics

Helen Whately MP, Shadow Work and Pensions Secretary, said:

“Today's figures confirm what the country already knows – under this Labour Government, opportunity is shrinking, and the economy is paying the price.

“The Conservatives left office with unemployment near record low and the fastest-growing economy in the G7. In just over a year, Labour has overseen decline in our economy, deterioration in our public services, and a collapse in trust. And now, with families already struggling, the country is braced for Rachel Reeves' impending tax rises, making it even harder for people to get by and for businesses to employ.

“We will continue to hold this government to account and demand a serious plan to deliver secure, well-paid jobs in every part of the country.”

END

Notes to editors:

ONS figures show unemployment is rising and wage growth is slowing

• Unemployment remains unchanged at 4.7 per cent under Labour's watch, after rising for the eleventh month in a row. The unemployment rate for 16 and over was 4.7 per cent in in May to July 2025 – up from the 4.2 per cent left by the last Conservative Government. The unemployment rate has risen or remained static every month since June to August 2024, and has now reached its highest level in four years, since June 2021 (ONS, Labour Market Statistics, 16 September 2025, link).

• The number of people on payroll has fallen by 127,000 since August last year. In August 2025, there were 127,000 fewer employees compared to in August 2024. The largest decrease in the accommodation and food service activities sector, with a fall of 90,000 employees. (ONS, Earnings and employment from Pay As You Earn Real Time Information, seasonally adjusted, 16 September 2025, link).

• Real wage growth has slowed to just 1.0 per cent. In the three months to July 2025, real total pay increased by just 1.0 per cent – the lowest three-month average since August 2023 and below the 2.5 per cent the Conservatives left in the three months to June 2024 (ONS, Real average weekly earnings using consumer price inflation, 16 September 2025, link). 

Labour's choices are weakening the labour market

• No10 Economic Adviser Minouche Shafik admitted that Labour's Employment Rights Bill will lead to fewer jobs.  SHAFIK: ‘I also think that we need to look at some other things like the way the labour market works. There's an employment bill that's currently working its way through parliament, which reduces flexibility for employers and does some very good things like gives workers who are on flexible contracts or part-time more rights and more stability, which is a good thing. But on the other hand, if you've got a lot of people on benefits who you are hoping to get into the labour market, as the government is hoping, you need to give employers some flexibility to take risks on those people. And so giving them more flexibility now would probably be a good thing' (LBC, 24 April 2025, archived).

• The Federation of Small Business (FSB) has warned the number of small businesses planning to let go of staff has doubled to a third because of the increase in employment costs. Analysis by the FSB shows that a third of business will let go of staff in Q4 2024, up 17 per cent from Q3, that 51 per cent of small employers say that employment costs are the greatest barrier to growth and that 67 per cent of small employers will stop hiring because of the Employment Rights Bill (FSB, Press Release, 20 February 2025, link).

• Rain Newton-Smith, CEO of the Confederation of British Industry (CBI) said the Bill will have ‘damaging consequences for growth, jobs and investment'. Rain Newton-Smith, CEO of the CBI said: ‘It is the unintended consequences of how these policies will be pursued, not the ideas themselves, which will have damaging consequences for growth, jobs and investment. There is a real risk that this legislation imposes a thicket of regulation across all businesses which prevents them from creating the high-quality, secure jobs which we all want to achieve' (Confederation of British Industry, Press Release, 4 March 2025, link).

• Entry-level jobs are at their lowest level in five years, as Labour's tax hikes hits younger and lower paid workers. The proportion of new entry-level jobs has declined to just over a fifth of the overall market, the lowest share since 2020, as employers cut back on lower-paid roles for younger staff to manage rising employment costs including the NICs Jobs Tax and national wage increase (The Times, 26 August 2025, link).

Rachel Reeves' decisions have created a £50 billion black hole – further tax rises are coming this Autumn

• The National Institute of Economic and Social Research has warned that Labour's economic mismanagement has created a £41.2 billion deficit and eroded Rachel Reeves' £9.9 billion headroom – creating a £50 billion black hole. ‘But the fiscal challenge looms largest. The Government is no longer on track to meet its “stability rule”, with our forecast suggesting a current deficit of £41.2 billion in the fiscal year 2029–30' (NIESR, UK Economic Outlook, 6 August 2025, archived).

• The National Institute of Economic and Social Research said the Chancellor faces an ‘impossible trilemma' and ‘cannot simultaneously meet her fiscal rules, fulfil spending commitments, and uphold manifesto commitments'. ‘Chief among these is the Government's increasingly acute fiscal predicament. Simply put, the Chancellor cannot simultaneously meet her fiscal rules, fulfil spending commitments, and uphold manifesto promises to avoid tax rises for working people. At least one of these will need to be dropped – she faces an impossible trilemma' (NIESR, UK Economic Outlook, 6 August 2025, archived).

The Conservatives left a strong labour market and a strong economy 

• When we left office, there were four million more people in work than in 2010, as we grew the economy and created more jobs. In April to June 2024, there were over 33 million people in work in the UK, up by over 4 million since 2010, and the employment rate 4.2 percentage points higher than 2010 (ONS, Labour Market Overview, 13 August 2024, link).

• When we left office, the unemployment rate had nearly halved with over 1 million people unemployed than in 2010, as we backed businesses, grew the economy, and got more people into work. In April to June 2024, the unemployment rate was 4.2 per cent, down by 3.8 points since 2010(ONS, Labour Market Overview, 13 August 2024, link).

• Under the Conservatives, the number of businesses across the UK increased by over one million, with over 5.6 million businesses operating in the UK, creating more jobs and opportunities for people across the country. In 2010, there were 4.5 million businesses and there were 5.6 million when we left office – meaning over 1.1 million new businesses were created under the Conservatives since 2010 because we put the support in place to make the UK the best place in the world to start and run a business (BEIS, Business population estimates for the UK and regions 2023: statistical release, 5 October 2023, link).

• We secured the fastest growing economy in the G7. GDP figures show the economy grew by 0.9 per cent between January and March 2024, the fastest growth in the G7 (ONS, GDP quarterly national accounts, UK: October to December 2024, 28 March 2025, link).

• We drove down inflation in government, restoring it to two per cent and helping to pave the way for interest rate cuts. When we left office, inflation was on target at 2.0 per cent, down from its peak of 11.1 per cent in October 2022 – allowing the Bank of England to cut interest rates (ONS, Consumer price inflation, UK: April 2024, 22 May 2024, link).

National jobs guarantee can help “turn the tide” on youth employment prospects, TUC

• Challenges in jobs market have been “long in the making”, says TUC – as it calls for ambitious policy response
• The number of payrolled employees has fallen by 127,000 over the past year, but the pace of recent falls has slowed.
• The employment rate rose slightly to 75.2% from 75.1%. The unemployment rate has risen to 4.7% from 4.6%, but this is offset by welcome falls in the inactivity rate to 21.1% from 21.4%.
• Youth unemployment is falling and is now 11.6%, down compared to the same period last year (13.3%)
• Real wages grew by 1.2% but real and nominal pay growth are both slowing

Commenting on today's (Tuesday) 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.  

“But there are some positive signs. It is welcome that both economic inactivity and youth unemployment are down.

“And the government has started to lay the foundations to reset our economy with significant investment in public services, stronger workers' rights and improving the support people need to get into work.

“But the government must build on this with a national jobs guarantee for young people. There are still too many young people stuck out of work, education and training.

“We know that real experience of paid work is the best way to turn the tide on long-term worklessness – and that over time this investment will more than pay for itself. “

ENDS

Notes to editors:

- National jobs guarantee: The TUC is calling for the government to build on its Youth Guarantee with a national jobs guarantee, which prioritises young people aged 18-24 who have been not in employment, education or training (NEET) for six months or longer and young people aged 18-24 who are at high risk of becoming long-term NEET.

This would offer young people experience of a real good quality job with a real wage; opportunities to gain new skills; and an employer reference – “game changing” factors for young people approaching the labour market.

While a national jobs guarantee would need upfront investment, TUC modelling estimates that in the long term the cost-benefit ratio would be 2.81, with the scheme paying for itself within a decade. 

https://www.tuc.org.uk/news/national-jobs-guarantee-can-fix-tories-toxic-legacy-neets-and-boost-economy-tuc

Cost Pressures Continue to Hit Labour Market - British Chambers of Commerce

Responding to the latest labour market data published by the ONS this morning, Jane Gratton, Deputy Director of Public Policy at the British Chambers of Commerce said:  

“The ongoing impact of business cost pressures, most notably from the national insurance hike, continues to hit the labour market.   

“Unemployment remains high and vacancies continue to fall with firms having to make difficult decisions on recruitment. Average earnings, including bonuses, gives a better picture of what businesses are facing, and between May and July that picked up to 4.7%.  

“Our latest survey showed labour costs remain the biggest cost pressure for SMEs, cited by 73% of firms. Continued wage growth is also impacting the wider economy. The Bank of England Governor told our annual conference in the summer that it is an important factor behind persistent services inflation.  

“Further employment costs are looming for businesses. The £5bn cost associated with the Employment Rights Bill poses a further threat to firms' investment and recruitment plans. Without further amendment, the legislation will add even more to employers' costs.  

“Firms can't absorb further cost pressures. That's why we are clear, there must be no more taxes on business in November's Budget. The Chancellor must also use her statement to invest in workforce health and skills, two issues currently hampering the business growth we all want to see.” 

IoD: Government's rejection of Employment Rights Bill amendments sends alarming message to business

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 further weakening in employer demand for labour, with vacancies falling by 1.4% over the quarter and a small decrease (8000) in payrolled employees on the month.

"A perfect storm of government policies via the Employment Rights Bill, above-inflation increases to the National living Wage, and the increase in Employer National Insurance Contributions have significantly weakened the business case for hiring staff.

“An IoD survey of over 600 business leaders last month found employment regulation is the biggest regulatory blocker to business growth in the UK, with 45% citing it as a barrier to their company growing. At the same time, six in 10 cited employment taxes as negatively affecting their organisation.

“The government's refusal to engage with sensible amendments made to the Employment Rights Bill in the House of Lords is sending a clear signal to businesses that their concerns are being ignored. With the return of the Employment Rights Bill to the Commons, we urge government to engage meaningfully with business to address its key concerns and restore business confidence in hiring.”

Full results

604 responses from across the UK, conducted between 18-28 August 2025. 15% ran large businesses (250+ people), 18% medium (50-249), 28% small (10-49 people), 27% micro (2-9 people) and 11% sole trader and self-employed business entities (0-1 people).

Which of the following, if any, are having a negative impact on your organisation?

Which areas of regulation are the biggest blockers to growth for your organisation?