Labour market indicators

Earnings growth over the whole economy in January to March 2025 was 5.6%. RPI inflation in March was 3.2% so this means that pay across the economy is increasing in real terms — but this doesn’t tell us anything about distribution or individual pay rates.

The labour market is shaky. Figures from the Office for National Statistics (ONS) show that the employment rate is basically unchanged at 75%. But unemployment has risen over the last year — it now stands at 4.5%. There are slightly fewer people classified as “economically inactive” (21.4%).

Fewer jobs are available for those looking for work. There were an estimated 761,000 vacancies in February to April 2025, continuing a long run of decline.

This is the lowest level in nearly four years, meaning it is getting harder to find work. The number of payrolled employees also fell by 53,000 (0.2%) over the quarter.

Employer “confidence” fell again this quarter, according to the CIPD HR body’s Labour Market Outlook. Their “net employment balance” (the difference between employers expecting to increase staffing levels versus those planning to reduce it) dropped to +8, the lowest level recorded outside of the pandemic. One in four employers are planning redundancies.