Wage growth in the UK has eased, while unemployment has climbed to its highest point in almost four years—highlighting growing signs of weakness in the labour market as businesses struggle with rising employment costs.
New figures from the Office for National Statistics (ONS) show that average regular earnings growth fell to 5.6% in the three months to March, the lowest since the period ending November 2024.
Despite the slowdown, pay continued to outpace inflation, with real wages—adjusted for the Consumer Prices Index (CPI)—rising by 2.6%. Still, the overall jobs outlook has worsened, with unemployment rising to 4.5% in the first quarter of 2025, up from 4.4% in the previous quarter. That’s the highest rate recorded since June to August 2021.
The ONS also reported a continued drop in job vacancies, which have now stayed below pre-pandemic levels for the second straight quarter. Meanwhile, the number of people on UK payrolls fell by 33,000 in April, reducing the total to 30.3 million.
Liz McKeown, director of economic statistics at the ONS, called the data further evidence of a softening jobs market. “Wage growth slowed slightly in the latest period but remains relatively strong, with little difference now between public and private sectors,” she said.
She added: “The broader picture continues to point to a cooling labour market, with a decline in payroll employment and a sharper fall in job vacancies over recent months.”
The latest figures come amid rising concern over the impact of higher labour costs on hiring decisions and overall economic activity.
