From education to employment

ONS Labour Market Data: Vacancies continue to fall indicating a cooling jobs market. Employment rate is 74.8%

2.7 million for 18 consecutive months since Apr-Jun 2023

The latest ONS Labour Market Information has just been released. Top note figures indicate:

  • Vacancies decreased to 812,000. There are 118,000 fewer vacancies than a year ago (Oct-Dec 2023) and vacancies have been falling consistently for two and half years.
  • Regular pay growth has risen to 5.6% on the year. The UK is in the 18th month of real pay growth – the longest run of sustained real pay growth since 2019.
  • Stronger wage growth is concentrated in finance (6%), manufacturing (6%), wholesale and retail (6%) and the private sector (6%) with the public sector trailing at 4.1%.
  • The employment rate is at 74.8%, down on the quarter but largely unchanged on a year ago.
  • Unemployment is up on the quarter and on a year ago at 4.4%. Official ONS Labour Force Survey data is still facing concerns around quality and reliability.
  • Economic inactivity due to long-term sickness is up on the quarter at 2.81 million. It has been above 2.7 million for 18 consecutive months since Apr-Jun 2023.

Estimates for payrolled employees in the UK decreased by 32,000 (0.1%) between October and November 2024 but rose by 95,000 (0.3%) between November 2023 and November 2024.

Payrolled employees fell by 11,000 (0.0%) over the quarter but rose by 134,000 (0.4%) over the year, when looking at September to November 2024. This is the period comparable with our Labour Force Survey (LFS) estimates.

The early estimate of payrolled employees for December 2024 decreased by 47,000 (0.2%) on the month and decreased by 8,000 (0.0%) on the year to 30.3 million. The December 2024 estimate should be treated as a provisional estimate and is likely to be revised when more data are received next month.

Increased volatility of LFS estimates, resulting from smaller achieved sample sizes, means that estimates of change should be treated with additional caution. We recommend using them as part of our suite of labour market indicators, alongside workforce jobs (WFJ), Claimant Count data, and Pay As You Earn (PAYE) Real Time Information (RTI) estimates.

The UK employment rate for people aged 16 to 64 years was estimated at 74.8% in September to November 2024. This is largely unchanged on a year ago, but down in the latest quarter.

The UK unemployment rate for people aged 16 years and over was estimated at 4.4% in September to November 2024. This is above estimates of a year ago, and up in the latest quarter.

The UK economic inactivity rate for people aged 16 to 64 years was estimated at 21.6% September to November 2024. This is below estimates of a year ago, and down in the latest quarter.

The UK Claimant Count for December 2024 increased slightly on the month and is up on the year, at 1.744 million.

The estimated number of vacancies in the UK decreased by 24,000 on the quarter to 812,000 in October to December 2024. Vacancies decreased on the quarter for the 30th consecutive period but are still above pre-coronavirus (COVID-19) pandemic levels.

Annual growth in employees’ average earnings for both regular (excluding bonuses) and total earnings (including bonuses) in Great Britain was 5.6% in September to November 2024. HM Revenue and Customs Pay As You Earn (PAYE) Real Time Indicators (RTI) pay data showed a similar annual growth rate when looking at both rates including arrear payments.

Annual growth in real terms, adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH), was 2.5% for regular pay and 2.4% for total pay in September to November 2024.

There were an estimated 51,000 working days lost because of labour disputes across the UK in November 2024.

Sector Reaction to the ONS Labour Market Data:

Rebecca Florisson, Principal Analyst at the Work Foundation at Lancaster University.

“Today’s labour market figures provide a mixed picture – increases to real term pay may grab the headlines, but other indicators remain sluggish.

“Regular pay is up 5.6% on the year, driven by private sector pay growth. While real wage growth of 2.5% on the year is good news for workers these gains appear to be being driven by pay catching up with price rises, not by increased productivity or economic growth. The Government must not be complacent that this level of pay growth will continue throughout 2025 and provide the improved living standards they are promising. This latest pay data may though raise further questions for Bank of England ratesetters, who may be concerned by continued strong wage growth in a stagnating economy.

“Vacancies continue to fall indicating a cooling jobs market. Although redundancies are at a historically low level, business voices continue to raise warnings that the simultaneous rise in employer National Insurance Contributions and minimum wage increases in April could result in job losses and reduced hiring in a number of low paid sectors and entry level roles.

“Achieving the Government’s ambition to raise the employment rate to 80% always appeared incredibly challenging, and looks even more so against a backdrop of a stagnating economy and falling vacancies.

“However, it is vital Ministers are not sidetracked from their long-term aims of raising labour market participation and improving workers’ rights. De-risking the route back into work for the near-record 2.81 million economically inactive due to long-term sickness could be key to achieving a higher employment rate – which requires employment support, but also notably, better access to good quality, flexible jobs for people to enter into.”

The Recruitment and Employment Confederation (REC) Chief Executive Neil Carberry said:

“This morning’s labour market data shows weakening performance before Christmas, reflecting business trading and cost concerns. That will not come as a surprise to watchers of the business surveys. The real test of this trend is what happens in January and February as firms return to hiring after Christmas, where anecdote from recruiters in the private sector is not as gloomy.

“The underlying issues we have seen in the labour market over the past few years are still clearly visible in today’s release – an employment rate below pre-pandemic norms, and higher economic inactivity. But these challenges risk being added to by shorter-term cost concerns, resulting in today’s rise in unemployment. At the highest level, this is not a weak jobs market, with unemployment still low by historic standards and vacancies high, but the trend is concerning. What is needed now is the right blend of government policy and business leadership. That is why we are looking to the government for clarity on their growth plans. At the moment firms are mostly seeing cost rises that will push us farther from the 80% employment rate goal. The Industrial Strategy cannot just be about a few projects or a few sectors – it needs to step up on planning, infrastructure, tax and workforce issues to deliver. At the moment, this whole narrative feels a little disjointed.

“Accurate and timely jobs data is central to driving economic strategy. The ONS labour market statistics must deliver a clear snapshot of the labour market. It is good to see the progress that has been made on the Labour Force Survey’s recovery, but this effort must be maintained now.”

Responding to the latest ONS figures, Stephen Evans, chief executive of Learning and Work Institute (L&W), said:

“A further worrying rise means there are now 1.25 million young people not in work or full-time education, up 29% since the pandemic. The data are uncertain, but rises seem highest among young men. Being not in education, employment or training (NEET) when young has a scarring effect on long-term career prospects. The Government therefore needs to redouble efforts to introduce a Youth Guarantee so every young person gets the education and career support they need.”

Nicholas Hyett, Investment Manager at Wealth Club, commented;

“Despite some movement round the edges, the November work stats show an economy that is broadly standing still. Unemployment has ticked up a touch and is slightly higher than expected, but that is largely down to people re-entering the workforce from economic inactivity – which is probably a net positive given the UK’s struggle with large numbers of economically inactive workers. 

“However, the trend is not your friend here if you’re the Chancellor. Early estimates suggest the number of people in employment shrank by 47,000 between November and December. With the increase in National Insurance contributions, announced in the budget, making workers more expensive from April it’s a trend we wouldn’t be surprised to see continue for the next few months. That’s not to say that the UK faces a massive layoff – but if businesses decide not to replace leavers and don’t hire to expand, the unemployment number will grow all the same.

“The UK Labour Market figures could make depressing reading from the next five or six months.”

Chris Daly, chief executive of the Chartered Institute of Marketing, comments on this morning’s latest figures from the ONS on jobs: 

“The figures are creeping in the right direction, but the recovery since the pandemic has been far weaker here in the UK than overseas. Today’s data shows that growth in professional services jobs continues to lag behind other sectors, with many marketing firms having been stung sharply by rising employment costs. UK marketers equipped with professional qualifications in digital marketing are in real demand overseas, leaving their bosses worried that employees may seek sunny climates overseas if they feel their ambitions are being held back. 

“The skills shortage remains a key issue for the country with almost nine in ten employers (88%) experiencing shortages in the last year. Today’s figures could see further budget cuts, with over a third of marketers already reporting being unsatisfied with their current salary, and more than four fifths of marketers wanting to upskill to adopt AI in the workplace. Employers need to think carefully about how to address the needs of marketers in a way that enables them to stand out against the competition in a bid for top talent.”


Related Articles

Responses