Marvin OnumonuThe unemployment rate in the UK was steady at 4.4%, while economic inactivity fell to 21.5%, according to the latest Office for National Statistics (ONS) Labour Market statistics.
There was a decrease of 14,000 payrolled employees between November and December 2024, while an increase of 44,000 was observed over the year to December 2024.
From October to December 2024, payrolled employees fell by 3,000 for the quarter but rose by 106,000 over the year.
The early estimate for January 2025 indicates a rise of 21,000 payrolled employees on the month and 49,000 over the year, reaching 30.4 million, although these numbers are provisional.
The UK employment rate for those aged 16 to 64 was 74.9% from October to December 2024, up from last year.
The Claimant Count for January 2025 increased to 1.750 million.
The number of UK vacancies decreased by 9,000 on the quarter, marking the 31st consecutive drop, but still remaining above pre-pandemic levels.
Annual growth in employees’ average regular earnings in the UK increased by 5.9%, with total earnings including bonuses up by 6.0% for October to December 2024.
Adjusted for inflation, real-term growth stood at 2.5%.
In December 2024, an estimated 52,000 working days were lost due to labour disputes across the UK.
Reaction:
Michael Stull, director at ManpowerGroup UK:
“Unemployment and pay growth in real terms remain unchanged this month, at 4.4% and 2.5% respectively.
“With the overall number of vacancies still in decline and another drop in payrolled employees, the hiring recession continues.
“ONS labour market data is also a lagging indicator, and work is ongoing to improve its accuracy.
“This means we need to take some caution with the latest readings as other sources and our own data tell us that business confidence is waning.
“Our workforce insights show that hiring is down by 36.5% year-on-year, with many employers delaying recruitment plans while employees who might otherwise be moving around or leaving the workforce for various reasons, are staying put.
“This comes at a time when productivity remains a critical concern.
“Competitive pay alone won’t help to navigate the challenges that many employers are facing.
“While the Living Wage rises from April are to be welcomed, we need a dual focus on wages and workforce capability.
“Investing in upskilling and productivity-boosting technologies will help to restore growth and confidence in the UK labour market but with national insurance payments set to rise from April alongside increasing utility costs, finding ways of improving workforce capabilities with existing resources won’t prove easy for many organisations.”
Mark Jones, reward and benefits partner at Isio:
“The latest labour market data reflects ongoing challenges for employers, with rising skills shortages and cost pressures continuing to shape hiring decisions.
“While there has been growth in payrolled employees over the past year, businesses still face significant volatility, particularly in vacancy levels and claimant counts.
“This uncertainty will require employers to be strategic in attracting and retaining talent.
“Rising National Insurance and Minimum Wage will add further pressure to employers’ bottom lines, making it even harder to rely on pay alone to drive recruitment and retention.
“In this context, a broad approach to employee engagement is more important than ever.
“Employers who invest in comprehensive benefits packages, including financial well-being support, career development, and flexibility, will be better placed to sustain workforce engagement and productivity.
“With the economic inactivity rate showing modest improvement, businesses must continue to focus on creating inclusive opportunities for groups such as older workers, parent returners, and those with long-term health conditions.
“A focus on inclusivity not only helps address the talent shortage but also strengthens business resilience in the face of economic challenges.
“Ultimately, employers need to move beyond salary and look at how they can offer a more holistic package of support.
“By focusing on benefits that meet the diverse needs of employees, businesses can build a more engaged and sustainable workforce.”
Hannah Slaughter, senior economist at the Resolution Foundation:
“The UK labour market continues to blow hot and cold.
“Having staged a welcome post-pandemic recovery, our analysis suggests that the employment rate has been falling for the past 18 months, with the small rise in the number of employees outweighed by growth in the adult population.
“While employment has been falling, real wages continue to rise. Last year was the best year for pay packets in two decades, helping to recovery some of the ground lost since the financial crisis.
“But with productivity failing to turn a corner and the wider economy struggling to grow, the UK’s pay recovery is likely to run out of steam soon.”
