ONS Labour Market Data : UK Unemployment Rate Now Estimated At 5%

The latest ONS Labour Market information has been released for July to September 2025.

• The UK employment rate for people aged 16 to 64 years was estimated at 75.0% in July to September 2025 (the Government has an 80% employment rate target). This is down in the latest quarter but above estimates of a year ago.
• The UK Claimant Count for October 2025 increased on the month but decreased on the year to an estimated 1.696 million.
• The UK economic inactivity rate for people aged 16 to 64 years was estimated at 21.0% in July to September 2025. This is largely unchanged in the latest quarter, but below estimates of a year ago
• Estimates for payrolled employees in the UK fell by 117,000 (0.4%) between September 2024 and September 2025 and decreased by 32,000 (0.1%) between August 2025 and September 2025.
• The estimated number of vacancies in the UK are broadly unchanged on the quarter; early estimates suggest a small increase of just 2,000 (0.2%) vacancies to 723,000 in August to October 2025. Vacancy numbers had been falling for 39 consecutive quarters. This now appears to have stabalised.

Work Foundation have also looked at the latest figures on zero hour contracts and they have found that 1.2 million people on zero-hour contracts, the second highest on record. Rebecca Florisson, Principal Analyst, Work Foundation at Lancaster University said: “The increase in zero-hour contracts may be partly seasonal and appears largely driven by women, and young workers aged 16-24 year olds. There are now 508,000 young workers aged 16-24 on zero-hour contracts – the highest level on record.”

Dr Helen Gray, chief economist at Learning and Work Institute (L&W), highlights: “The employment rate for disabled people remains a staggering 30 percentage points below that for people without a disability. Only half of all people of working age with long-term health problems are in employment and this has barely changed since before the Covid pandemic. Yet only one in ten out-of-work disabled people get help to find work each year. Employment support needs to be extended to a much larger proportion of the 741,000 people who are currently economically inactive due to long-term sickness who want to work.”

The UK unemployment rate for people aged 16 years and over was estimated at 5.0% in July to September 2025. This is up in the latest quarter and above estimates of a year ago.

The UK economic inactivity rate for people aged 16 to 64 years was estimated at 21.0% in July to September 2025. This is largely unchanged in the latest quarter but below estimates of a year ago. The UK Claimant Count for October 2025 increased on the month but decreased on the year to an estimated 1.696 million.

When looking at July to September 2025, the period comparable with the ONS Labour Force Survey (LFS) estimates, the number of payrolled employees fell by 109,000 (0.4%) over the year, and by 26,000 (0.1%) over the quarter.

The early estimate of payrolled employees for October 2025 decreased by 180,000 (0.6%) on the year, and by 32,000 (0.1%) on the month, to 30.3 million. ONS said the October 2025 estimate should be treated as a provisional estimate and is likely to be revised when more data are received next month.

The estimated number of vacancies in the UK are broadly unchanged on the quarter; early estimates suggest a small increase of just 2,000 (0.2%) vacancies to 723,000 in August to October 2025.

Annual growth in employees’ average earnings in Great Britain for regular earnings (excluding bonuses) was 4.6%, and for total earnings (including bonuses) was 4.8% in July to September 2025. Annual average regular earnings growth was 4.2% for the private sector and 6.6% for the public sector. However, the public sector annual growth rate is affected by some public sector pay rises being paid earlier in 2025 than in 2024. RTI pay data are also published and provide a provisional, timelier estimate of median pay. The two data sources generally trend well for mean total pay.

There were an estimated 39,000 working days lost because of labour disputes across the UK in September 2025.

Sector Reaction:

Rebecca Florisson, Principal Analyst, Work Foundation at Lancaster University, a leading think tank for improving working lives in the UK, on the latest zero-hour contract figures from the ONS:

“The number of people on zero-hour contracts continues its upward rise to near record levels. There are now 1.2 million people on zero-hour contracts, the second highest on record.

“The increase in zero-hour contracts may be partly seasonal and appears largely driven by women, and young workers aged 16-24 year olds. There are now 508,000 young workers aged 16-24 on zero-hour contracts – the highest level on record.

“This continued rise in the use of zero-hour contracts comes at a time when the labour market is weakening and employers are facing rising costs. However, it is surprising in the context of new legislation due to come in 2027. The Employment Rights Bill – which is heading towards Royal Assent – aims to provide guaranteed hours to workers on zero-hour contracts after a likely reference period of 12 weeks. In 2023, 92.5% of zero-hour contract workers would have qualified to be offered guaranteed hours. This is an important step towards providing more security in these types of contracts.

“But the proposed legislation does not appear to reduce the appetite for hiring on these insecure contracts and raises a concern that some employers will look to employ people in other insecure forms such as through gig platforms when the changes come into effect.”

REC response to ONS labour market figures, November 2025

The ONS published its latest labour market figures this morning. The Recruitment and Employment Confederation (REC) Chief Executive Neil Carberry said:

“Today’s official jobs statistics are a stark reminder to the Chancellor that she needs to back business to tackle the rising unemployment and redundancies caused by a year of weak growth and rising business costs. Only business can deliver the growth she needs to balance the books.

“With vacancy numbers now stabilising after their long decline, there is an opportunity to make progress if the Budget backs businesses rather than punishing them. The government’s commitment to supporting business needs to extend to a break from a rising tide of business taxes, a much more practical approach to an Employment Rights Bill which is chilling the jobs market and delivering on skills reform. By the end of the Parliament, government will be collecting hundreds of millions more from the Apprenticeship Levy than it spends on apprenticeships, a tax on employing young people.

“Pay is down from its peaks but much of the upward momentum is coming from things that the government controls, such as statutory minimum rates and public sector awards. A more sustainable path for these rates ought to see pay moderate further over the next six months.”

Responding to the latest ONS figures, Dr Helen Gray, chief economist at Learning and Work Institute (L&W), said:

“The employment rate for disabled people remains a staggering 30 percentage points below that for people without a disability. Only half of all people of working age with long-term health problems are in employment and this has barely changed since before the Covid pandemic. Yet only one in ten out-of-work disabled people get help to find work each year. Employment support needs to be extended to a much larger proportion of the 741,000 people who are currently economically inactive due to long-term sickness who want to work. Alongside this, both government and employers must ensure that good quality employment opportunities are open to everyone, regardless of their personal circumstances.”

Jeanette Wheeler, Chief People Officer at HR, payroll and finance provider, MHR:

“The autumn budget is around the corner and UK unemployment is at its highest level in four years. According to the latest ONS figures, the UK unemployment rate stands at 5.0%, up from 4.8% last quarter, most likely a result of tax rises and fears around growth. The labour market statistics also point to slowing growth for current employees, as annual growth in employees’ average earnings stands at 4.6%, down from 4.7% last quarter.

“Match the concerning ONS figures with the independent review launched just this week into the rising number of young people classed as NEET, it’s clear we’re facing  a gloomy outlook just weeks before the government’s latest budget. Organisations are trying to manage a range of challenges just to keep stable, and we must see the government working with industry to widen routes into work and open the job market for growth.

“Now is the time to build business leaders’ confidence to invest in upskilling their workforce and focus on building entry-level roles that teach the digital and AI skills that organisations need, or the UK risks a further decrease in productivity and global competitiveness.”

Isaac Stell, Investment Manager at Wealth Club said:

“There will be no pre-budget comforts that can be taken from today’s employment data as the unemployment rate hits its highest level since May 2021. This self-inflicted wound, rather than healing, continues to weep.

“Not only has the unemployment rate risen, but wage growth, albeit still rising ahead of inflation continues to shrink. There can be no doubt that the fiscal levers pulled by the Government and the Chancellor have significantly contributed to these figures and the responsibility lies at their feet.  

“With speculation around the Budget reaching fever pitch, businesses have postponed hiring and are less likely to commit to any form of investment until they know where the economic land lies. The stakes couldn’t be higher for the government and with further tax rises guaranteed at the budget, the fiscal landscape for employers and employees looks to be on ever shakier ground.”