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Recent official data reveals that the unemployment rate in the UK increased to 5.1% for the three months ending in October, up from 5% in the prior quarter. This rise marks the highest number of unemployed individuals since January 2021, nearing levels observed during the peak of the Covid-19 pandemic. The Office for National Statistics (ONS) described these figures as reflective of a “subdued labour market,” suggesting ongoing weakness in employment opportunities.
Wage growth trends between August and October 2025 show variation depending on sector. Overall, average earnings excluding bonuses rose by 4.6%, but this increase was uneven: private sector wage growth slowed from 4.2% to 3.9%, whereas public sector wages grew from 6.6% to 7.6% compared with the previous quarter. Despite this, wage growth still outpaced inflation. However, there was a decline of 149,000 employees on company payrolls in October from the previous year, indicating a contraction in hiring. Liz McKeown, director of economic statistics at the ONS, commented that these statistics point towards “a weakening labour market” with continued subdued hiring activity.
Young workers have been notably impacted by these developments. The unemployment figure for those aged 18 to 24 rose by 85,000 in the three months to October 2025, marking the largest increase since November 2022. In response, the government announced plans to investigate youth unemployment and inactivity. Meerah Nakaayi, a 22-year-old from London, shared her personal experience of being unemployed since June despite having completed a two-year apprenticeship in policy followed by two years of work in the sector. Reflecting on her recent job search, she said: “The last six months have been incredibly frustrating and demotivating. My last interview feedback stated how they had 290 applications for a policy analyst role … for a niche policy area. I think that just shows how competitive it really is out there.”
Experts and officials weighed in on the labour market challenges. James Reed, CEO of Reed Recruitment, observed that several key indicators “are going in the wrong direction,” expressing uncertainty about whether the situation has reached its lowest point. Reed also welcomed the recent minimum wage rise announced in the Budget but noted that “the economics of hiring at entry level is becoming less and less appealing to employers.” Meanwhile, Yael Selfin, chief economist at KPMG UK, highlighted the weak prospects for young worker hiring and linked falling private-sector wage growth to a slowdown in business hiring. She suggested that these trends support the Bank of England potentially cutting its base interest rate soon. In political responses, Secretary of State for Work and Pensions Pat McFadden emphasized the government’s commitment to addressing these challenges by investing £1.5 billion in apprenticeships and workplace opportunities for young people. On the other hand, Helen Whately, shadow work and pensions secretary, criticized the government’s approach, warning that “growth-killing policies” risked causing job losses and hardships for families during the holiday season
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