Recent figures from the Office for National Statistics (ONS) reveal several key trends in the UK labour market for early 2025, showing both signs of improvement and areas of concern. The UK employment rate, which measures the percentage of people aged 16 to 64 in work, stood at 75.1% between February and April, with the unemployment rate at 4.6%. Both of these figures were higher than the same period a year ago, indicating some resilience in the job market despite broader economic challenges.
Employment and Unemployment Rates
The UK’s employment rate has remained relatively stable, showing an increase in the latest quarter compared to the same time last year. At 75.1%, it signals that a good number of people in the working-age group are employed.
On the other hand, the unemployment rate of 4.6% is slightly above historical norms, but still not alarming when compared to the rates in many other economies.
Economic Inactivity and Payrolled Employees
The UK’s economic inactivity rate for people aged 16 to 64 has shown a positive trend, falling to 21.3% in the latest quarter. This is an improvement compared to the same period last year, as more people are engaging with the workforce, either through employment or active job searching.
However, there has been a noticeable decline in the number of payrolled employees. Between March and April, the number of payrolled employees dropped by 55,000, a 0.2% decrease. When comparing April 2024 to April 2025, the decrease is even more pronounced, with a loss of 115,000 payrolled employees, or a 0.4% drop.
Over the February to April 2025 period, there was a quarter-on-quarter decrease of 78,000 (0.3%) in payrolled employees, and a year-on-year decrease of 51,000 (0.2%). These figures suggest that fewer people are securing or retaining payroll jobs, which could reflect a slowing economy or reduced business confidence.
Vacancies and Hiring Trends
The number of job vacancies in the UK has also decreased, continuing a downward trend. Between March and May 2025, vacancies fell by 63,000 quarter-on-quarter, bringing the total to 736,000. This marks the 35th consecutive quarterly decline in vacancies. In total, vacancies are now 59,000 lower than their levels in January-March 2020.
ONS survey feedback suggests that some firms are either not hiring new workers or failing to replace those who leave. This could be a sign of cautious business behaviour in response to the uncertain economic climate.
Public Sector Employment
On a more positive note, public sector employment has seen slight growth. In March 2025, public sector employment was estimated at 6.15 million, a modest increase of 7,000 (0.1%) compared to December 2024.
Over the past year, public sector employment has risen by 35,000 (0.6%), indicating a steady demand for workers in government services.
While the UK’s employment rate remains relatively stable, other indicators like payrolled employee numbers, vacancies, and hiring activity suggest that the economy may be slowing down. Despite this, the public sector continues to show growth, which may offset some of the challenges seen in the private sector.
Employers are exercising caution, and the number of job vacancies continues to fall, pointing to potential long-term challenges in the labour market.
