UK wide data
The headline figures for the final quarter of 2024 show continued resilience, possibly reflecting the calm before the storm, as the labour market braces itself for a challenging period. The UK employment rate was estimated at 74.9%, above estimates of a year ago, and up in the latest quarter. The UK unemployment rate was estimated at 4.4% in October to December 2024. This is above estimates of a year ago, and up in the latest quarter.
The estimated number of vacancies in the UK decreased by 9,000 on the quarter to 819,000 in November 2024 to January 2025 – the 31st consecutive decrease. We can expect to see this number continue on a downwards trajectory with employers taking a cautious approach to recruitment in the face of increased worker protections, including unfair dismissal becoming a day one right.
Annual growth in employees' average regular earnings, excluding bonuses, in Great Britain was 5.9% in October to December 2024, and annual growth in total earnings, including bonuses, was 6%. Employers have faced the unenviable task of retaining core talent whilst balancing demands for increased pay with rising costs. With the employer National Insurance contributions hike from April this year we are likely to see the earnings figures stall.
With the world stage creating increasing uncertainty to an already turbulent market, labour intensive industries, such as manufacturing, retail and hospitality are likely to face the greatest challenges in the coming months with cost cutting measures an unfortunate reality. It is vital for employers to keep a close eye on changes to employment law and take every opportunity to engage in the ongoing consultations.
Northern Ireland data
The most recent labour market figures for Northern Ireland show ongoing resilience against a difficult economic background. The figures show that over the year both payrolled employee numbers and earnings have increased. From the Labour Force Survey, the unemployment rate saw a decrease. However, the employment rate has also decreased, and the economic inactivity rate has increased.
The number of employees receiving pay through HMRC PAYE in Northern Ireland in January 2025 was 806,700, an increase of 0.2% over the month and an increase of 1% over the year. Earnings from HMRC PAYE indicated that Northern Ireland employees had a median monthly pay of £2,290 in January 2025, an increase of £2 over the month and an increase of £149 over the year.
The latest Northern Ireland seasonally adjusted unemployment rate for the period October to December 2024 was estimated from the Labour Force Survey at 1.6%. This represents a decrease of 0.1% over the quarter and a decrease of 0.7% over the year. The employment rate increased by 0.1% over the quarter and decreased by 0.8% over the year to 72.1%.
The unemployment rate is likely to face further challenges over the coming months as employers grapple with the demand for higher wages and their own escalating costs. Further, the rise in AI and technology is likely to place the figures under greater strain as employers look to save costs by employing alternative operational measures.
Employers are continuing to watch the progression of the "Good Jobs" Employment Rights Bill and will undoubtedly need to engage flexible workforce strategies to navigate the ongoing changes. NISRA received confirmation that 50 redundancies occurred in January 2025 and there were 440 proposed redundancies. Recruitment freezes and further redundancies are both probable as employers adapt to the challenging market.
Scotland data
The latest Scottish labour market figures for the period October to December 2024 show continued strength in the market despite a difficult ongoing economic climate. The headline figures for this period show the employment rate in Scotland was 74.2%, up 0.9% over the quarter. By way of comparison, Scotland's employment rate was below the UK rate of 74.9%. The unemployment rate was 3.8%, up 0.5% over the quarter. Scotland's unemployment rate was below the UK rate of 4.4%.
The early seasonally adjusted estimates for January 2025 indicate that median monthly pay for payrolled employees in Scotland was £2,486, an increase of 5.2% compared with January 2024. With the increase in employer National Insurance contributions from April this year we are likely to see employers pass on some of this cost to employees through pay stagnation.
The forthcoming changes to employment law will undoubtedly lead to employers taking a cautious approach to recruitment over the coming months, with recruitment freezes and redundancies a likely reality. Labour intensive industries, such as retail and hospitality, are likely to face the greatest impact and will currently be strategising on how to retain essential talent whilst facing increased costs and further regulation.
