UK labour market stats

By – Joanne Frew, Global Head of Employment & Pensions | DWF

Economic uncertainty, coupled with ongoing legislative reform, is placing heightened pressure on the UK labour market.  The UK employment rate was estimated at 75.1% in September to November 2025.  This is largely unchanged in the latest quarter but above estimates of a year ago.  The UK unemployment rate was estimated at 5.1% in the same period, showing an increase in the latest quarter and over the last year.  These indicators highlight a labour market that remains resilient but increasingly under strain.

The estimated number of vacancies in the UK for October to December 2025 indicated a small increase of 10,000 to 734,000 compared with July to September 2025.  We are still seeing a reluctance across the market to recruit employees as employers grapple with rising costs and increased worker protection.

Annual growth in employees’ average earnings in Great Britain for regular earnings (excluding bonuses) was 4.5% and for total earnings (including bonuses), was 4.7% in September to November 2025.  Annual average regular earnings growth was 7.9% for the public sector and 3.6% for the private sector.  The public sector annual growth rate is impacted by some public sector pay rises being paid earlier in 2025 than in 2024.   Persistent increases in living costs continue to put upward pressure on wages, leaving employers under ongoing strain to adjust compensation accordingly.  Many organisations are now revisiting their pay structures and wider reward offerings in an effort to remain competitive in a challenging labour market.

With the Employment Rights Act 2025 receiving Royal Assent on 18 December 2025, we are embarking on one of the most significant periods of employment law reform in decades.  A growing number of employers are scaling back recruitment plans as they navigate higher operating costs, tighter restrictions on flexibility, and a more demanding compliance landscape.

Employers are encouraged to take early, proactive measures to prepare for the forthcoming legislative changes and facilitate an orderly transition. The reforms present a constructive opportunity to reinforce workplace protections and support the development of a future‑focused, resilient workforce.  Those employers who work collaboratively and invest in strengthening their workplace culture are likely to adapt most effectively to the coming reforms and position themselves for long‑term success.