ONS Labour Market: December 2025 – Unemployment At 5.1%, The Highest Level For Almost Five Years

The latest ONS Labour Market data for the UK has been released in the December 2025 update. Estimates for payrolled employees in the UK fell by 149,000 (0.5%) between October 2024 and October 2025 and decreased by 22,000 (0.1%) between September 2025 and October 2025.

When looking at August to October 2025, the period comparable with the ONS Labour Force Survey (LFS) estimates, the number of payrolled employees fell by 113,000 (0.4%) over the year, and by 24,000 (0.1%) over the quarter. The early estimate of payrolled employees for November 2025 decreased by 171,000 (0.6%) on the year, and by 38,000 (0.1%) on the month, to 30.3 million.

UK Employment Rate at 74.9%

The UK employment rate for people aged 16 to 64 years was estimated at 74.9% in August to October 2025. This is down in the latest quarter, but largely unchanged on estimates a year ago. The Government target is for 80% employment rate.

The UK unemployment rate for people aged 16 years and over was estimated at 5.1% in August to October 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 August to October 2025. This is down in the latest quarter and below estimates of a year ago.

UK Claimant Count

The UK Claimant Count for November 2025 increased on the month, but decreased on the year to an estimated 1.683 million. The Claimant Count figure for the latest month is provisional, and is subject to revisions after first publication, owing to later amendments to records in the administrative systems, for example as work capability assessments conclude and more information is available about benefit claimants’ ability to work. Revisions in recent months have tended to be made downwards.

The Number of Vacancies Decreased Slightly

The estimated number of vacancies in the UK are broadly unchanged on the quarter; early estimates suggest a small decrease of just 2,000 (0.2%) vacancies to 729,000 in September to November 2025.

36.6 million Workforce Jobs in the UK in September 2025, With a Decrease of 116,000 jobs from June 2025

The estimated number of workforce jobs in the UK was 36.6 million in September 2025. This is a decrease of 116,000 (0.3%) from June 2025, with decreases of 15,000 (0.0%) in the employee jobs component and 120,000 (2.9%) in the self-employment jobs component. Over the year, the estimated number of workforce jobs was down by 115,000 (0.3%) caused by a decrease of 201,000 (4.7%) in the self-employment jobs component.

Employment in the public sector was estimated at 6.18 million in September 2025

Employment in the public sector was estimated at 6.18 million in September 2025, an increase of 7,000 (0.1%) compared with June 2025, and an increase of 62,000 (1.0%) compared with September 2024.

Employees’ Average Earnings

Annual growth in employees’ average earnings in Great Britain for regular earnings (excluding bonuses) was 4.6%, and for total earnings (including bonuses) was 4.7% in August to October 2025. Annual average regular earnings growth was 3.9% for the private sector and 7.6% 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.

Annual growth in real terms, adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH), was 0.5% for regular pay and 0.6% for total pay, in August to October 2025. Annual growth in real terms, adjusted for inflation using the Consumer Prices Index excluding owner occupiers’ housing costs (CPI), was 0.9% for regular pay and 1.0% for total pay, in August to October 2025.

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

Sector Reaction

Ben Harrison, Director of the Work Foundation at Lancaster University, said:

“The UK labour market is continuing to lose momentum. Rising unemployment, falling vacancies and weak real wage growth all provide troubling signs for workers and jobseekers as we head towards 2026.

“Pay growth is weakening with real wages rising by just 0.5% as inflation continues to eat away at wage increases. On average, workers have seen their real incomes rise by just £142.22 on the year – or £2.73 a week – meaning many will be feeling the pinch as Christmas nears. With limited economic growth and wage growth flagging, the success of the Government’s drive to bear down on the cost of living will play a critical role in whether workers see real wage growth in 2026.

“The marginal real wage growth we have seen is primarily being driven by above-inflation rises in the public sector and in typically low-pay sectors such as wholesale and retail. Meanwhile, workers in financial services and construction are currently seeing annual pay growth below the rate of inflation.

“Unemployment is at 5.1%, its highest level for almost five years. This reflects a rise of 327,000 on the year, and has primarily been driven by more men and young people out of work. There are now 546,000 young people aged 18-24 who are unemployed – the highest since 2015 and up by 85,000 on quarter. Most worryingly, it appears it is getting harder for these workers to access work. Long-term unemployment has risen by 93,000 on the year, with the challenge of finding work exacerbated by an increasingly competitive jobs market as vacancies are down on the year by 78,000.  

“On the day that the Government has announced the Milburn Review into youth unemployment, these figures also lay bare the tough jobs market facing young people, and indicate policymakers must pick up the pace on boosting the number of secure, well-paid jobs through its Industrial Strategy and in rolling out additional tailored employment support to help people back into work quickly.”

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

“Further worrying signs in the labour market with further falls in payroll jobs. Young people, with over one million not in work or full-time education, are among those most affected, and retail and hospitality have shed 129k payroll jobs in a year. The rise in unemployment to its highest since the pandemic partly reflects a fall in economic inactivity. While this suggests more people are looking for work, it also indicates some are struggling to find work. We need a twin approach of providing more help to find work and creating the conditions for employers to create jobs.”

Isaac Stell, Investment Manager at Wealth Club said:

“The rate of UK unemployment continued to edge up during October, as the confidence sapping budgetary pre-amble took its toll on the UK jobs market.

With all the noise, speculation and damaging sentiment, it is no surprise that UK businesses put off hiring in October. These figures should come as no surprise to the Chancellor and the Government, businesses need an environment of confidence in order to thrive, it is clear to anyone that this has been lacking in the recent past.

Despite unemployment ticking up, pay growth came in far higher than expected, good news for those in employment with the Christmas shopping season firmly underway.

These latest figures coupled with very weak GDP growth last week will give the Bank of England sufficient reason to cut interest rates at its meeting on Thursday. This is despite inflation sitting stubbornly at 3.6% as of October. Further rate cuts from there onwards however will become progressively more difficult to justify as the competing forces vie for importance.”