Labour market indicators

Earnings growth over the whole economy in the three months to February 2025 was 5.9%.

RPI inflation in January was 3.4%, so this means pay across the economy is increasing in real terms. But this doesn’t tell us anything about distribution or individual pay rates.

Figures from the Office for National Statistics show that the employment rate is increasing slightly and now stands at 75.1%. However, the unemployment rate has continued to rise over the last year.

It now stands at 4.4%, higher than it was pre-Covid but not as high as it reached during the peak of the pandemic.

The jobless claimant rate ticked up to 1.766 million, lower than recent peaks but still half a million higher than before Covid.

Meanwhile, there are slightly fewer people classified as “economically inactive”, although numbers remain historically high.

Overall, the labour market continues to cool — there were an estimated 718,000 vacancies in January to March 2025, continuing a long run of decline. This is the lowest level in nearly four years, meaning it is getting harder to find work. Payrolled employee numbers also fell.

Many employers say they are restricting hiring plans or making redundancies due to higher national insurance costs, announced in the autumn 2024 Budget.