What’s happening with jobs, vacancies and pay in the UK?

A new month, a new UK labour market release — and this one is particularly notable. The data now cover up to April 2025 across all indicators, which means that the impact of the recent increase in employer national insurance contributions (NICs) is fully reflected in the latest release from the Office for National Statistics (ONS).

But let’s not get too far ahead of ourselves. Since the policy was implemented in April, any effects (if indeed there are any) may have started to show beforehand, as firms anticipated the change. Equally, they may only become more pronounced after implementation. In other words, we may need to wait a little longer to see the full impact of the change in policy.

In general, this month’s ONS data show a rise in the UK’s unemployment rate after a period of stability. From February to April 2025, the rate increased to 4.6%, the highest level in the post-Covid-19 period.

Wages are still growing, but at a slower pace. Nominal wages are increasing at an annual rate of 5%, with real wages rising more modestly, at 1.5%. But the annual growth rate of average weekly earnings has been trending down in recent months, in both nominal and inflation-adjusted terms.

Vacancies continue to fall, with a decrease of 3% in the last month and by 17% over the past year. The latest figures also show annual declines recorded in 18 out of 19 ONS sectors. Redundancies decreased for the third consecutive month.

Employment

The employment rate for 16-64-year-olds remains stable at 75%. The number of people (aged 16+) in employment reached 34 million from February to April – an increase of 36,000 compared with the previous month.

But the number of employees on payroll has fallen more than in any previous period. Provisional estimates for May 2025 indicate that the figure stood at 30.2 million – a decrease of 109,000 employees over the past month, and 273,640 fewer than one year ago. To put this in perspective, the largest monthly decrease in 2025 before this month was 55,000 (March to April). This month’s drop (April to May) more than doubled that figure.

The unemployment rate has also increased, inching up to 4.6% between February and April 2025 — the highest level in the post-Covid-19 period (see Figure 1). This marks the second consecutive monthly rise following a period of stability.

Figure 1: UK unemployment rate

Source: Author’s calculations using ONS labour market data.

Wages

In terms of pay, average weekly total earnings (including bonuses) decreased for the first time this year, with total median weekly pay falling to £720. In contrast, regular pay has continued to rise, reaching £674 in April 2025.

In recent months, we have observed a downward trend in the annual growth of average weekly earnings, both in nominal and real terms (see Figure 2). This means that wages are growing, but at a slower pace. Nominal annual wage growth stood at 5.3% for total pay and 5.2% for regular pay. Inflation-adjusted wage growth increased by 1.5% for total earnings and 1.4% for regular earnings. This marks the 23^rd consecutive month of earnings growth outpacing inflation.

Figure 2: Annual growth rate of UK average weekly earnings, total and regular pay (nominal versus real)

Source: Author’s calculations using ONS labour market data.

Vacancies and redundancies

Overall vacancies declined to 736,000 over the period from March to May 2025. This marks the 36^th consecutive period of decline since May 2022. Compared with the previous month, vacancies decreased by 3%, and by 17% compared with the same period last year (see Figure 3).

Compared with December 2024 to February 2025 (quarterly change), vacancies fell in 15 of the 19 ONS industry groups. The few sectors that saw an increase in vacancies in the last quarter were electricity, water supply and real estate activities. On an annual basis, 18 out of 19 sectors experienced a reduction in new hires, with the only exception being ‘water supply, sewerage, waste and remediation’ (see Figure 4).

Figure 3: Total UK vacancies

Source: Author’s calculations using ONS labour market data.

Figure 4: Annual change and quarterly change (%) in UK vacancies, by sector

Source: Author’s calculations using ONS labour market data.

Over the longer term, redundancies have almost doubled compared with three years ago. In April 2022, redundancies stood at around 51,000, rising to 102,000 by April 2025 (Figure 5). But in the short term, redundancies fell for the third time after a period of five consecutive months of increases.

Between February and April 2025, a total of 102,000 people were made redundant – a decrease of 8,000 compared with the previous month but an increase of 3,000 when compared with the same period last year.

Figure 5: UK redundancy levels, 2019-25

Source: Author’s calculations using ONS labour market data.

The UK labour market continues to perform relatively well in comparison with the rest of the G7 (see Table 1). In terms of the employment rate, at 75%, the UK is in the top three, behind only Japan and Germany. And with an unemployment rate of 4.5%, the UK ranks fourth, behind Japan, Germany and the United States, but ahead of France, Italy and Canada.

Table 1: International comparisons

Source: Author’s calculations using ONS labour market data.
Note: The lower age limit for the UK and the United States is 16 rather than 15.

The latter figures paint a worrying picture for the UK labour market. Unemployment is rising, reaching the highest level since the pandemic; annual wage growth is slowing; vacancies continue to fall; and the number of employees on payroll has dropped. These are all symptoms of a sickly market.

All of this may reflect companies anticipating the recent changes to employer NICs and the rise in the minimum wage — adjusting their staffing and pay strategies ahead of time. These effects are likely to be compounded by broader global dynamics, including the impact of tariff policies and the uncertainty triggered by recent US trade measures.

But there’s another key development that adds a striking twist: the Bank of England recently cut interest rates by 0.25 percentage points, bringing the base rate down to 4.25%. While the move signals an attempt to support a ‘soft landing’ for the economy, it comes at a time when wage growth remains elevated.

This has sparked concern among some economists and policy-makers, who fear that persistently high wage increases — if not accompanied by productivity gains — could re-ignite price pressures, even as headline inflation continues to ease. While concerning for workers, the recent slowdown in wage growth offers some relief for the Bank, easing this upward inflationary pressure.

To learn more about the dynamics of the labour market, explore other recent articles from the Economics Observatory:

• What do we know about labour market power in the UK
• Good work what do we know about the quality of UK jobs
• What share of the economic pie goes to workers?

Author: Camila Arroyo-From

Photo: jacoblund for iStock