DWF employment expert comments on UK labour market

Joanne Frew, Global Head of Employment & Pensions at DWF, comments on the latest UK labour market statistics,
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“The number of people out of work but actively seeking jobs increased in the last quarter as the UK labour market continues to battle against the ongoing economic climate. There were clear signs of the market weakening as employers take more steps to reduce their costs and protect themselves against future economic turbulence whilst more people previously classed as “economically inactive” seek to return to stable employment. This conflict between employers exercising caution over recruitment and more potential employees seeking work will need to be resolved in order for the labour market to stabilise over the next quarter.

The estimated number of vacancies in the UK in March to May 2025 was 736,000 – the 35th consecutive quarterly decline with quarterly falls seen in 14 out of the 18 industry sectors. The increase in employer National Insurance contributions in April this year and the rise in the National Living Wage will undoubtedly have had an impact on recruitment.

The UK employment rate was estimated at 75.1% in February to April 2025. This is above estimates of a year ago, and up in the latest quarter. The UK unemployment rate was estimated at 4.6%, also above estimates of a year ago, and up in the latest quarter.
Annual growth in employees’ average regular earnings excluding bonuses in Great Britain was 5.2% in February to April 2025, and annual growth in total earnings including bonuses was 5.3%. Employers are having to balance keeping costs under control with demands for increased pay from employees. Thinking outside the box has never been more important with many employers focusing on talent retention programmes which don’t demand considerable immediate expenditure.

The employment market is currently experiencing significant turbulence due to global political uncertainty and major changes in employment legislation. Labour-intensive sectors like hospitality, retail, and manufacturing are likely to face the greatest challenges in the near term, necessitating cost-cutting measures.
Fostering a positive workplace culture and employee engagement, ensuring clear communication, and maintaining transparency are essential components for employers to navigate this challenging period.”