Labour market indicators

Pay growth across the economy is outstripping inflation. While average earnings are up 4.8% on last year, CPI inflation is just 3.8%.

Pay deals recorded by LRD Payline for August 2025 were lower than in previous months. The median pay rise was 3.2% in August, down from 4% earlier in the year (including April when most bargaining units have their anniversary date).

In a survey of employers, Incomes Data Research found that the most common pay award intention was 3% to 3.5%, and a majority of employers said they expected the coming year’s pay offer to be lower than this year.

The head of the British Chambers of Commerce said that labour costs were a “massive concern” and companies would freeze headcount to limit costs.

The effect of the increase in the minimum wage and national insurance has been a particular problem for low-wage sectors like hospitality. Of the 164,000 fall in payroll employment last year, 108,000 came from hospitality.

Meanwhile, a new TUC report into young people’s labour market participation has called for a jobs guarantee for young people, action on apprenticeships, and steps to improve the quality of work.

There are almost a million young people (aged 16–24) who are not in education, employment or training.