Responses to today's Labour Market Statistics - Oct 14

Conservative Party: Unemployment up for twelfth month in a row under Labour

Today [Tuesday 14^th of October 2025], unemployment rose for the twelfth month in a row under Labour, to 4.8 per cent in the three months to August, up from 4.7 per cent the previous month, according to the latest ONS data.

After inheriting one of the strongest labour markets in Europe, Labour have managed to turn growth into stagnation and opportunity into decline in just over a year.

The Conservatives left office with unemployment near record lows, the fastest-growing economy in the G7, four million more people in work than in 2010, and the number of businesses across the UK up by over one million.

Since then, Labour's economic mismanagement has undermined confidence and driven up costs for employers. Major forecasters, including the OBR, OECD, and Bank of England, have all downgraded the UK's growth forecasts, raising the prospect of another downgrade in the Autumn.

Labour's National Insurance Jobs Tax adds at least £800 per worker and the Employment Rights Bill will add a further £154 per worker. Together, they will increase the cost of creating a job by nearly £1,000 per worker. The Institute for Fiscal Studies has warned that the sectors where young people tend to work “will see the biggest rise in employer costs”, slashing entry-level opportunities just as youth unemployment rises.

With nearly one million young people not in education, employment or training, the Government should be championing work and aspiration. Yet Labour's policies are choking opportunity, raising costs, and locking out those trying to get ahead. Businesses are cutting entry-level roles, apprenticeships are falling, and wage growth is slowing.

The Conservatives will do the right thing for the next generation. Through our First Jobs Bonus, the first £5,000 of National Insurance paid by any British citizen starting their first job will be placed into a personal savings account. This will be money earmarked for a first home deposit or future savings. For working couples, that could be a £10,000 boost toward building a life.

And we will go further: we have a plan to reduce red tape for entrepreneurs by making it easier to open a business bank account, improve the service provided by HMRC, expand business coaching in schools so young people know how to start a business, and scrap the terrible policies in Labour's job-destroying Trade Union Charter. Our plan will support entrepreneurs to set up businesses to create jobs, wealth, and opportunities for young people, as we deliver our plan to build a stronger economy.

Together, these measures grow the number and resilience of small businesses, the single largest engine of job creation in the UK economy. By making entrepreneurship simpler, faster, and more accessible, the plan stimulates hiring, tackles youth unemployment, and supports long-term growth.

That's the difference. Labour tax work and trap ambition. Reform are a one-man band promising the same reckless spending increases and left-wing economics. Only the Conservatives will back Britain's workers, reward effort, and give the next generation the chance to build a life of their own.

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

“The only thing growing under Labour is the unemployment queue and the national debt. The Conservatives left office with unemployment at near record lows and the fastest-growing economy in the G7. In just over a year, Labour has killed growth and crushed jobs and livelihoods, with families paying the price.

“Keir Starmer has no backbone and is too weak to stand up to his own backbenchers to cut welfare and get people back into work. Now families face another Rachel Reeves' tax raid, which will pile on pressure on workers and punish the businesses that create jobs.

“Only the Conservatives have the plan to do the right thing for the next generation by freeing business to create more jobs, drive growth, and deliver a stronger economy built on work, not welfare.”

END

Notes to editors:

ONS figures show unemployment is rising and private wage growth is slowing

• Unemployment has increased to 4.8 per cent under Labour's watch, after rising for the eleventh month in a row. The unemployment rate in June to August 2025 4.8 per cent, up on the quarter and up from the 4.1 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 May 2021 (ONS, Labour Market Statistics, 14 October 2025, link).

• The number of people on payroll has fallen by 100,000 in the past year. Between September 2024 and September 2025, the number of payrolled employees fell by 100,000. Since Labour entered office in July 2024, there are 128,000 fewer payrolled employees (ONS, Earnings and employment from Pay As You Earn Real Time Information, seasonally adjusted, 14 October 2025, link).

• Private sector wage growth has slowed it its lowest rate in nearly four years. Private sector wage growth slowed to 4.4 per cent, while public sector pay increased, reflecting pay rises given by Labour (ONS, Twitter, 14 October 2025, link).

Labour's choices are weakening the labour market

• Labour have increased the cost of hiring a worker by nearly £1,000 a year. The Employment Rights Bill will cost £154 per worker and the National Insurance Jobs Tax will cost at least £800 per worker, totalling £954 per worker per year. (ONS, A01: Summary of labour market statistics, 12 August 2025, link; DBT, Employment Rights Bill: Economic analysis, October 2024, link; OBR, Economic and Fiscal Outlook, 30 October 2024, link; Conservative Research Department Analysis, 12 September 2025, available on request).

• 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).

The fiscal outlook has deteriorated, creating a black hole in the public finances and leaving Rachel Reeves under acute pressure:

• Major forecasters – including the OBR, OECD, and Bank of England – have downgraded the UK's growth forecasts, raising the prospect of another downgrade in the Autumn. This year, the OBR, OECD and the Bank of England have all downgraded the UK's growth forecasts (OBR, Economic and Fiscal Outlook, 26 March 2025, link; The Financial Times, 6 February 2025, link; MoneyWeek, 3 June 2025, link).

• Senior economists – including Andrew Bailey, governor of the Bank of England – expect productivity forecasts to also be downgraded in the Autumn. BAILEY: ‘If you were to take what I would loosely call the OBR story, I think you would more say it was a financial crisis and that [the] effect will wear off. I am a bit sceptical about that' (The Financial Times, 24 June 2025, link).

Compounding the fiscal challenge, Reeves faces rising demands from her party for higher spending – making tax rises inevitable:

• Senior Labour figures – including Andy Burnham and Louise Haigh – are piling pressure on Rachel Reeves to prioritise spending over fiscal credibility. In a thinly veiled challenge to Starmer's leadership, Burnham set out his ‘vision for Britain', including £40 billion of extra borrowing to build council houses, rejecting Reeves approach of ‘being in hock to the bond markets'. This followed calls from former Transport Secretary Louise Haigh for a ‘decisive break with the fiscal rules' to ensure the Government ‘remake Britain' (The Financial Times, 24 September 2025, link; The New Statesman, 8 September 2025, link).

• Additionally, senior Labour figures – including deputy leadership contender Lucy Powell – have joined the chorus demanding the removal of the two-child benefit cap, despite the £3.5 billion annual cost. Lucy Powell has openly called for the cap to be scrapped, echoing interventions from Rachel Maskell and Dianne Abbott among others, while Bridget Phillipson branded the policy ‘spiteful' and said removing it is ‘on the table'. On 24 September, The Times reported that Starmer will be told by the Child Poverty Taskforce that scrapping the cap is the single most effective way to reduce child poverty – despite the Resolution Foundation estimating the policy would cost £3.5 billion a year (The Times, 24 September 2025, link; BBC News, 19 September 2025, link; The Sun, 17 September 2025, link; The Resolution Foundation, Press Release, 12 May 2025, link). 

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).

Unite reaction to unemployment figures

In reaction to the latest unemployment figures, Unite general secretary Sharon Graham said:

“The UK economy needs a co-ordinated industrial strategy backed by serious investment. To do anything else risks workers in Britain being thrown on the scrap heap and rising unemployment.

“Other economies like Germany are investing heavily in their industries and the UK is lagging way behind. 

“Chronically low investment and a failed net zero plan is delivering a jobless transition.”

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:     

“Unemployment continues to edge up while job vacancies continue to fall. These are clear signs that employers are holding back on recruitment under the burden of soaring employment costs.   

“We would normally expect a loosening of the labour market to lead to an easing in average earnings. But, while the rate of growth has slowed, they remain above inflation, adding to pressure on businesses' balance sheets.    

“Our latest survey shows that labour costs remain the biggest cost pressure for SMEs, cited by 72% of firms. Firms tell us the increase in employer NICs is the biggest driver of this. As a result, we are unlikely to see any further cuts in Bank of England interest rate this year.  

“Firms are increasingly fearful of any further increase in costs in the Budget, which they simply won't be able to absorb. Already, firms are bracing themselves for an additional £5bn cost associated with the Employment Rights Bill, which will threaten investment plans, increase risk and impact on opportunities for people in the labour market.  

“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 to help more people thrive in work.” 

Government on right track but “no quick fix” for long-standing jobs market challenges – TUC

• While payrolls are down 100,000 on a year ago, monthly figures are unchanged for four months
• The unemployment rate rose by 0.1% and the employment rate fell by 0.1% on the latest quarter.
• Vacancies fell for the 39^th consecutive period, with the quarterly fall slowing to -1.3% from -7.3%.

• Youth unemployment is now 12.0%, down from 12.8% in the same period last year
• Real pay growth continues to slow and is now at 1.0% (using CPI). This is down from 1.8% on the previous quarter and 2.9% in the same period last year

Responding to today's (Tuesday) labour market data which shows some positive signs amid long-term challenges, TUC General Secretary Paul Nowak said:

“There are chinks of light in the jobs market with a welcome levelling off of falls in payrolls and vacancies.

“But there are no quick or easy fixes to wider labour market challenges, which have been a long time in the making.

“The government is on the right track with significant public investment, stronger workers' rights and improving the support people need to get into work.

“The Chancellor must build on this at the Budget, sustaining investment in our infrastructure and continuing to repair our public services. Employers must also do more to support disabled people to remain in work, driving up job quality to ensure more people progress for the long term.

“The new jobs guarantee, which is a major step forward for boosting young people's job prospects, must be ambitious in scale and scope – with early access for those who need it most.”

Unemployment rises and wage growth falls: jobs tax "snuffing out growth" - Liberal Democrats

Responding to the ONS' latest jobs figures, which show that the rate of UK unemployment has risen and wage growth has fallen, Liberal Democrat Treasury Spokesperson Daisy Cooper said:

"The Chancellor's jobs tax has left the Government up a creek without a paddle, snuffing out growth in our high streets and for small businesses, keeping people out of work and increasing the benefits bill even further. Wage growth is almost non-existent against inflation.

"This approach cannot continue while jobs are lost and shops shutter. The Chancellor must take the handbrake off our economy and go for growth. Aside from immediately scrapping the jobs tax, that means negotiating a bespoke UK-EU Customs Union to turbocharge our economy and raise billions of pounds to protect public services and struggling families."

IoD: Change of policy direction needed to drive growth and jobs

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 shows a further softening in the labour market, with a decrease of 10,000 in payrolled employees on the month and an increase (0.1%) in the unemployment rate.

“Taken together, the Employment Rights Bill, the increase in employer National Insurance Contributions, and above-inflation increases to the National Living Wage are having the very impact businesses have been warning about for a long time: directly increasing the cost and risk of employing staff and undermining job creation.

“An IoD survey of 588 business leaders in September found that half of businesses which saw an increased National Insurance bill from April have responded by reducing employment. At the same time, the government's refusal to engage with sensible amendments made to the Employment Rights Bill has sent a clear signal to businesses that their concerns are being ignored.

“A change of policy direction is needed if the government is to meet its target of stimulating growth and supporting businesses to create jobs. The Chancellor should avoid levying additional taxes on business in the forthcoming Budget, and the government should begin to engage meaningfully with employers to minimise the damage that the Employment Rights Bill will do to job creation and economic growth.”

Full Results

588 responses from across the UK, conducted between 12-29 September 2025. 12% ran large businesses (250+ people), 21% medium (50-249), 27% small (10-49 people), 28% micro (2-9 people) and 12% sole trader and self-employed business entities (0-1 people).

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