According to data from the Office for National Statistics (ONS), the job market in the UK has shown signs of weakening, with a decrease in the number of workers on payrolls in the early months of the year and a decline in job vacancies. This trend is believed to be potentially influenced by the rise in employer National Insurance contributions and the implementation of the National Living Wage in April.
Despite the slowing growth of wages, pay is still increasing at a pace higher than the rate of inflation. Regular earnings, excluding bonuses, saw a 5.6% annual growth in the first quarter of the year, as reported by the ONS. The ONS’s director of economic statistics, Liz McKeown, noted that the overall outlook indicates a cooling labor market.
In the January to March period, the unemployment rate rose to 4.5%, up from the previous figure of 4.4%. However, the ONS has advised caution in interpreting these figures due to low response rates in the survey on which they are based. Additionally, the number of employees on companies’ payrolls decreased by 47,000 in March and an estimated 33,000 in April.
Job vacancy numbers have also seen a decline, with an estimated 42,000 fewer vacancies in the UK in February to April 2025. Some companies had forewarned that the recent tax changes and minimum wage increase might impact recruitment. A separate survey released recently portrays a bleak perspective on the labor market with a record low number of employers intending to hire more staff in the coming months, excluding the impact of the pandemic
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