Further Breakdown & Analysis
The latest Labour Market Overview for October 2025 confirms a continued shift in the UK jobs landscape. We are seeing definitive signs of a cooling market, with several key indicators showing a move away from the intense tightness experienced over the past few years.
Key Statistics from the ONS
- Unemployment Rises: The overall unemployment rate has risen to 4.8%, with 1.74 million people unemployed. Crucially, youth unemployment remains a serious concern, with the 16-17 age group hitting 33.5% and the 18-24 age group at 12%.
- Falling Employment and Vacancies: The employment rate fell slightly to 75.1%, with the number of people in work at 34.22 million. Furthermore, job vacancies have now fallen for the 39th consecutive quarter to 717,000. This puts vacancies 78,000 below pre-Covid levels, leading to a ratio of 2.4 unemployed people per vacancy.
- Inactivity and Payroll: Economic inactivity is largely unchanged at 21%, with 9.12 million people inactive, though this is still 485,000 higher than pre-pandemic levels. The number of payrolled employees saw a decline of 10,000 in September, and is now 100,000 lower than 12 months ago.
- Pay Growth Slows in Real Terms: Annual growth in regular pay (without bonus) stood at 4.7%, with total pay (with bonus) at 5.0%. However, when adjusted for inflation, regular pay growth was only 0.6%, demonstrating the continued pressure on household finances.
- Redundancies and Disputes: Redundancy rates held steady at 3.8 per thousand employees. Meanwhile, working days lost to disputes plummeted to just 15,000 in August 2025, a significant drop from the 83,000 recorded in July, suggesting industrial action is subsiding.
What This Means for Employers and Job Seekers
The shift towards higher unemployment and fewer vacancies means that candidate availability is improving across many sectors. While this eases immediate pressure on hiring, the long-term challenge of engaging the significantly large economically inactive population—especially younger, skilled workers—remains crucial. Businesses should focus recruitment strategies on improving retention and offering competitive compensation packages that genuinely beat inflation.
For more information on how to navigate these changing dynamics, read our blog for more information. We can provide guidance on various topics from attracting top talent to managing your workforce effectively.
