UK’s unemployment hits the highest in four years
Wage growth in the UK has slowed down, and unemployment has risen to its highest level in nearly four years, indicating further weakness in the job market as businesses face increasing employee costs.
Data from the Office for National Statistics (ONS) shows that average regular earnings growth fell to 5.6% in the three months leading up to March, the lowest rate since the three months ending in November 2024.
Despite this slowdown, wages are still outpacing inflation, with real pay—adjusted for Consumer Prices Index (CPI) inflation—rising by 2.6%. However, the overall outlook for the labor market has worsened, with unemployment increasing to 4.5% in the first quarter of 2025, up from 4.4% in the previous quarter.
This marks the highest unemployment rate since June-August 2021.
The latest ONS data also indicates a continued decline in job vacancies, which have remained below pre-pandemic levels for the second consecutive quarter. Additionally, the number of workers on UK payrolls decreased by 33,000 in April, bringing the total to 30.3 million.
Liz McKeown, director of economic statistics at the ONS, noted that these trends are further evidence of a cooling labor market. She stated, “Wage growth has slowed slightly in the latest period but remains relatively strong, with little difference between the public and private sectors.”
She added, “The broader picture shows the labor market cooling, with a decline in the number of employees on payroll in the first quarter of the year. The number of job vacancies has also decreased again, with the rate of decline accelerating in recent months.”
These figures raise concerns about how rising labor costs are affecting companies’ hiring decisions and the overall economic momentum.
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