Labour Market Statistics, May 2025

This is the first publication of the Labour Market Statistics since the rise in National Insurance contributions and the increase in the National Living Wage, revealing a mixed and fragile picture of recovery and transition. Over the past five years, the workforce has shrunk by 1.3 million people due to increased economic inactivity. Long-term ill health remains the leading cause of inactivity. Younger people, particularly 16-24-year-olds not in education, are seeing rising inactivity and widening employment gaps, fuelling concerns about a growing population not in education, employment or training (NEET). This indicates that long-term disengagement from the labour market could have lasting consequences on the UK's productivity and social cohesion.

Sectoral patterns show persistent stress in service sectors such as retail, hospitality, and administrative services, with both vacancies and payroll employment declining. These are sectors that are heavily reliant on low-wage labour and tend to employ high numbers of young people. Policy changes such as increases to the National Living Wage and employer National Insurance contributions (NICs) are likely exacerbating cost pressures in these industries, potentially contributing to job shedding or hiring freezes. Rising redundancies, coupled with declining vacancies and payrolls, points to increasing employer caution and a cooling labour market.

In this context, the government's Get Britain Working strategy is more critical than ever.  The data clearly show that structural inequalities are not only persistent but, in some cases widening. Therefore, without focused and equitable policy intervention, the current trends risk further exclusion rather than enabling opportunity and fulfilling the policy ambition of creating an inclusive labour market in which everybody can participate and progress in work. Today’s statistics also highlight the caution among employers. This is an urgent call for action for the government to work on improving employer confidence to mitigate impact of the changing policy landscape.