The UK labour market continues to evolve amid economic shifts and the ongoing impact of the COVID-19 pandemic. This article takes a deeper look into the trends to offer an understanding of the latest data and their implications.
Trends and considerations: A comparative overview
As the first quarter of 2025 commences, the labour market continues to present a mixed picture. The estimated number of vacancies in the UK decreased by 24,000 on the quarter to 812,000. Despite this being the 30th consecutive period of vacancy reduction, vacancies are still above pre-coronavirus (COVID-19) pandemic levels.
However, the increased volatility of Labour Forces Survey (LFS) estimates, as a result of smaller sample sizes, means that change estimates should continue to be treated with caution. It is recommended to consider them alongside other labour market indicators -workforce jobs (WFJ), Claimant Count data, and Pay As You Earn (PAYE) Real Time Information (RTI) estimates – to accommodate discrepancies in data from these comparable sources.
As outlined in previous Labour market overviews, the longer-term broad consistency between RTI and WFJ, (looking at annual change), suggests that these sources are likely provide a more reliable estimate of employment. These sources continue to indicate that we have seen a sustained moderation of growth in employment over the last year. RTI and WFJ also show less volatility than the LFS over the same time period.
However, the LFS continues to be the sole source of data for unemployment, economic inactivity and self-employment, and provides a range of breakdowns that are only possible from LFS data.
Latest data: employment, unemployment, and earnings
The estimation for payrolled employees in the UK has continued to decrease and by 32,000 between October and November 2024. Furthermore, the early estimate of payrolled employees for December 2024 decreased by 47,000 (0.2%) on the month but increased by 8,000 (0.0%) on the year, to 30.3 million. The estimates should be treated as provisional, though, as they are likely to be revised when more data is available in February.
Consistent with a year ago, but down marginally from the previous quarter, the UK’s employment rate for people aged 16 to 64 years was estimated at 74.8% in the September to November 2024 period. In congruence, the unemployment rate has increased marginally (by 0.4%) from last quarter, now standing at 4.4%. The UK economic inactivity rate (for people aged 16 to 64 years) continues to slightly decrease and was estimated at 21.6% in September to November 2024.
Annual growth in employees’ average earnings for both regular (excluding bonuses) and total earnings (including bonuses) in Great Britain was 5.6% in September to November 2024. HM Revenue and Customs Pay As You Earn (PAYE) Real Time Indicators (RTI) pay data showed a similar annual growth rate. However, when adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH), annual growth in real terms was 2.4% for total pay in September to November 2024.
Key Indicators at a Glance:
Job Vacancies: Vacancies decreased on the quarter, for the 30th consecutive period, but remain above pre-pandemic levels.
Nominal Earnings: In September to November 2024, regular and total annual growth rates were up on the previous three-months.
Real Earnings: In September to November 2024, regular and total annual growth rates are up on the previous three-month.
Payrolled Employees: The number of payrolled employees is now well above pre-pandemic levels.
Employment Rate: The employment rate is down on the quarter but largely unchanged on the year, and is still below pre-pandemic rates.
Unemployment Rate: The unemployment rate is up on the quarter and up on the year, and is above pre-pandemic rates.
Inactivity Rate: The economic inactivity rate is up on the quarter and up on the year, but is still above pre-pandemic rates.
Conclusion
The January 2025 Labour Market Report documents the continued marginal improvement of the UK’s employment landscape. The challenges reported in previous months remain consistent, particularly in terms of economic inactivity and employment which are both still less favourable than pre-pandemic levels. The focus persists on using labour market indicators collectively, and on policymakers and stakeholders remaining vigilant, utilising a broad range of data to inform decisions that will facilitate a full recovery.
If you are a candidate or a business and would like more information, please contact us on 01604 239555 or email info@impactrecruitment.co.uk, and a member of our team will be in touch.
Source: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/january2025
