Roundup: UK labor market lacks momentum as wage growth slows, unemployment rises

The Star

13-05-2025

LONDON, May 13 (Xinhua) -- Britain's labor market showed further signs of cooling in early 2025, as wage growth slowed, unemployment edged higher, and job vacancies continued to decline, according to official data released Tuesday.
As shown by data from the Office for National Statistics (ONS), the employment rate stood at 75.0 percent in the first quarter of 2025, reflecting a marginal increase from the same period last year, however, the unemployment rate also increased from a year ago.
The number of employees on company payrolls in Britain dropped by 47,000 between February and March, with early estimates indicating a further decline of 33,000 in April. Last month, the total number of payrolled employees stood at 30.3 million.
Meanwhile, wage growth continued to moderate. Average weekly earnings excluding bonuses rose by 5.6 percent in the three months to March compared with the same period a year earlier, down from 5.9 percent in the previous quarter. Including bonuses, total pay rose by 5.5 percent year-on-year. After adjusting for inflation, real regular pay grew by 1.8 percent.
Job vacancies fell by 42,000 in the three months to April, marking the 34th consecutive quarterly decline. The total number of vacancies now stands at 761,000, slightly below pre-pandemic levels.
Following recent increases in employment costs, businesses across various sectors are facing growing pressure. Kate Shoesmith, deputy chief executive of the Recruitment and Employment Confederation, described the lack of momentum in the job market as the key issue in Britain. She said the decline of vacancies was an expected outcome of recent rises in employment costs.
Following higher payroll taxes and a recent increase in the minimum wage, the retail and hospitality sectors, in particular, have recorded increased job cuts in March and April.
The rising cost of employment remains "a major challenge," said Jane Gratton, deputy director of public policy at the British Chambers of Commerce. "Business sentiment has dropped due to the National Insurance increase and other changes to employment policy."
"Although vacancies are now more than half a million below their pandemic peak, firms tell us recruitment remains a huge challenge. They are still struggling to find people with the skills they need, which is continuing to drive wage growth and feed into inflation," Gratton added, noting that the situation is likely to get worse for employers in the months ahead.
Noting that access to global talent remains the only solution to address urgent skills shortages, Gratton pointed out that the option has become even more costly.
Moreover, the British government has been tightening immigrant policies. Prime Minister Keir Starmer announced on Monday that the UK government is increasing the skill thresholds for migrant workers, raising the degree level required, and tightening the English language requirements.
The Bank of England lowered its benchmark interest rate by 0.25 percentage points to 4.25 percent earlier this month, but policymakers have stressed the need for more evidence of easing inflation before further rate cuts. Analysts noted that persistent wage growth poses a challenge to the central bank's efforts to curb inflationary pressure.
Analysts maintain that the cooling job market reflects pressures from both domestic policy shifts and global trade uncertainties weighing on business confidence.