UK Labour Market: November 2025 + reactions

Estimates of employment, unemployment, inactivity, average weekly earnings, vacancies and other labour market related statistics for the UK.

• Employment in the UK: November 2025

Lib Dems: Unemployment figures: “writing is on the wall” for Chancellor's jobs tax

Responding to the latest ONS figures, which show unemployment has risen from 4.8% to 5%, the highest level in four years, Liberal Democrat Treasury Spokesperson, Daisy Cooper MP said:

“Surely the writing is on the wall now for the Chancellor's jobs tax.

“Everyone except Rachel Reeves seems to have woken up to the fact that forcing small businesses to pay more in tax for giving people jobs would damage job opportunities. Now the proof is staring her in the face.

“The Government must reverse their damaging National Insurance hike at the Budget, and commit to saving the small businesses who employ millions in Britain and are at risk of collapse, if they're to have any hope of reversing today's concerning trend.”

ENDS

Conservative response to unemployment rising again

Helen Whately MP, Shadow Secretary of State for Work and Pensions, said:

“Under this Labour Government, we have now experienced 13 consecutive months of rising unemployment. That's thousands of families without the security of a regular pay packet thanks to the Chancellor's bad choices; hiking up taxes on jobs, piling red tape on businesses, and destroying confidence in the economy.

“And because the Government doesn't have the backbone to take tough decisions, these same families now face even more punishing tax rises, despite the Chancellor's promise that they'd never come.

“Their high-tax, anti-business policies are driving opportunity out of Britain and making life harder for families and those searching for work. And with an impending Budget of further tax rises, the situation is only going to get worse.

“Only the Conservatives have the team and the plan to unleash businesses, grow the economy, cut waste, and get Britain working again.”

ENDS

Notes to Editors: 

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

• Unemployment jumped to 5.0 per cent, its highest rate since February 2021 during the pandemic lockdown. The unemployment rate for people aged 16 and over in July to September 2025 jumped to 5.0 per cent, up from 4.7 per cent the previous quarter and up from 4.3 per cent in the same period one year ago. The unemployment rate is now at its highest since December 2020 to February 2021, when the country was in lockdown during the pandemic. The unemployment rate has increased or remained static for the past thirteen months (ONS, Labour Market Statistics, 11 November 2025, link).

• 180,000 jobs have been lost in the past 12 months, including 32,000 in October 2025 alone. In October 2024, there were 30.42 million people on payroll, which has fallen to 30.27 million by October 2025. In October 2025, there were 31,980 fewer people on payroll than in September (ONS,Earnings and employment from Pay As You Earn Real Time Information, seasonally adjusted, 11 November 2025, link).

• Private sector wages are growing at the slowest rate since March 2021. In the three months to September 2025, the annual increase in private sector wages was just 4.4 per cent, its slowest growth rate since the three months to March 2021 when the country was emerging from the pandemic lockdowns (ONS, Average weekly earnings, 11 November 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 Government's own impact assessment suggests that by increasing the cost of employment, the Employment Rights Bill risks one in six businesses sacking workers and one in eleven cutting wages. ‘Across all businesses in the UK with 10 or more employees… responses included to reduce the number of employees (17 per cent), limit overtime hours (10 per cent) or reduce wages for other employees (9 per cent)' (DBT, Employment Rights Bill: Economic Analysis, October 2024, link).

• 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 Conservatives left a strong labour market and a strong economy 

• When we left office, the unemployment rate had nearly halved with over 1 million fewer 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).

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:       

“There is little comfort in this data for businesses or the government. Employers are being squeezed by sky-high employment costs, and we are beginning to see the consequences.  

“The strong rise in unemployment is a worrying sign, as vacancies remain virtually static on the quarter.  Butwhile the rate of wage growth with bonuses has slowed again, it is still strong and above inflation.     

“This feeds into higher prices, and we expect the Bank of England will be paying close attention to the wage growth trend ahead of next month's decision on interest rates.  

“Nearly three quarters (72%) of businesses in our latest survey said labour costs are the biggest cost pressure. They say the increase in employer NICs is the main driver of this.    

“With job vacancies static, high levels of economic inactivity and £5bn of extra employment legislation around the corner, the Budget must give firms a reason to be optimistic.  Businesses need confidence to boostinvestment and drive the economic growth we all want to see.   

“The number one priority for firms is that no fresh tax burdens are placed on them in the Budget. The Chancellor must also use her statement to invest in workforce health and skills.” 

Institute of Directors

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 continued softening in employer demand for labour, with the number of payrolled employees down 32,000 on the month and unemployment up 0.3 pps on the quarter.

“The fact that the number of payrolled employees is down 180,000 on the year should be a wake-up call for the government. This fall is a direct result of the recent increase in employer's National Insurance contributions and the upcoming Employment Rights Bill, the cumulative effect of which is that hiring employees has become a costlier and riskier proposition for businesses.

“An IoD survey of 500 business leaders in October found that the Employment Rights Bill is the top employment and workplace regulation blocking organisations' ability to grow (cited by 54% of respondents). The message from business is clear: the Bill is deterring businesses from hiring staff.

“If the government is serious about achieving its growth and employment targets, it must use the Budget to implement sensible changes to its employment reforms and avoid tax-raising measures which further increase the cost of employment.”

Full Results

500 responses from across the UK, conducted between 17-30 October 2025. 14% ran large businesses (250+ people), 20% medium (50-249), 25% small (10-49 people), 30% micro (2-9 people) and 11% sole trader and self-employed business entities (0-1 people).

Which are the employment and workplace regulations that are most blocking your organisation's ability to grow?

In what ways are they blocking your organisation's growth? Please select all that apply.

TUC

• The unemployment rate rose by 0.3 to 5% into the last quarter, employment fell 0.3 to 75.0% and inactivity is flat at 21.0%

• Payrolls fell by 117,000 on the year to September

• Youth unemployment up to 12.7%, with inactivity down from 31.2 to 30.0%.

• Vacancies have stabilised at 723,000

• Zero hours contracts rise to 1.2 million, the highest since around mid 2023.

• Real pay growth has slowed to 0.8% against CPI inflation, down from 3.0% in the same period last year. 

Commenting on the latest labour market figures, TUC General Secretary Paul Nowak said:  

“Living standards and decent jobs must be at the heart of the Budget.  

“Households up and down the country are still feeling the pinch, with real pay sluggish. After years of falling living standards there is still much ground to make up.   

“There are no easy fixes to longstanding challenges in the jobs market, with the fall in jobs, higher youth unemployment and persistently high use of zero hours contracts remaining significant concerns.  

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

“The Chancellor must build on this at the Budget by boosting living standards and bringing down household bills, sustaining investment in our infrastructure and continuing to repair our public services.  

“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.” 

On the latest data which shows zero hours contracts at near record levels (1.2 million), Paul added: 

“Insecure work is pervasive up and down the country. That's why the Employment Rights Bill is so badly needed – it will deliver common sense rights and protections like a ban on exploitative zero hours contracts and a right to a contract which reflects your genuine hours. 

“It's time Lib Dem and Tory Peers stopped blocking stronger rights for millions.”