NEWS STORY : UK Unemployment Rises to 4.5% Amid Slowing Wage Growth and Declining Vacancies
STORY
The UK’s unemployment rate has climbed to 4.5%, marking its highest level in nearly four years, according to the latest figures from the Office for National Statistics (ONS). This uptick reflects a cooling labour market, with notable declines in job vacancies and wage growth. In the first quarter of 2025, the number of job vacancies fell by 5.3%, with the construction sector experiencing the steepest decline. Simultaneously, regular earnings growth slowed to 5.6%, down from 5.9%, though still high by historical standards. The slowdown is attributed partly to increased employer national insurance contributions and a 6.7% rise in the national living wage.
The Bank of England, which recently cut interest rates to 4.25%, remains cautious due to persistent wage growth and inflation risks. The number of payrolled jobs dropped by 47,000 between February and March. Sectors like retail and hospitality recorded the most employment losses, despite high wage growth. Despite these challenges, real wage growth – adjusted for inflation – remains positive at 2.6%. However, many workers may not feel the benefits due to fiscal drag and unchanged tax thresholds, which reduce take-home pay as gross incomes rise. The ONS, under scrutiny for data quality issues, faces an independent review following the resignation of national statistician Ian Diamond. Business leaders express growing concerns amid uncertain economic conditions.
