UK data
Joanne Frew, Global Head of Employment & Pensions at DWF, has provided insights on the latest UK labour market statistics. Additionally, Liz Ramsaran, Pensions Partner at DWF, has shared her expectations for the upcoming Autumn budget.
Joanne said:
"Economic uncertainty and continuous regulatory and legislative reform are placing increasing strain on the UK labour market. The UK employment rate was estimated at 75% in July to September 2025. This is down in the latest quarter but above estimates of a year ago. The UK unemployment rate was estimated at 5% in the same period. This is up in the latest quarter and above estimates of a year ago. These figures highlight the significant pressure on employers in the current environment.
The estimated number of vacancies in the UK are largely stable over the quarter, early estimates suggest a small increase of just 2,000 vacancies to 723,000 in August to October 2025. We are still seeing a reluctance across the market to recruit employees as employers grapple with rising costs and increased worker protection.
Annual growth in employees’ average earnings in Great Britain for regular earnings (excluding bonuses) was 4.6% and for total earnings (including bonuses) was 4.8% in July to September 2025. Annual average earnings growth was 4.2% for the private sector and 6.6% for the public sector. The figures are slightly altered due to public sector pay rises being paid earlier in 2025 than in 2024. Employers remain under sustained pressure to adjust compensation in line with escalating living expenses.
Despite the Employment Rights Bill batting back and forth between the House of Commons and the House of Lords, we can expect Royal Assent before Christmas, with a raft of new employment legislation to follow. Many employers are adopting a cautious stance on recruitment amid concerns over rising costs, reduced flexibility, and greater compliance obligations. Attention is now turning to the Autumn Budget for clarity and reassurance in the face of ongoing economic uncertainty. However, the reality is that the Budget is unlikely to alleviate concerns with predictions of further cost increases for employers.
Employers should take proactive steps now to prepare for upcoming reforms and ensure a seamless transition. These changes present an opportunity to enhance workplace protections and create a stronger, future-ready workforce."
Liz Ramsaran, Pensions Partner at DWF commented:
"Changes to the pensions landscape made at the next budget are also likely to have an effect on employers and their workforce including in terms of increased costs of staff rewards and benefits packages and also on the ability of workers to be able to afford to retire.
While we wait for confirmation from the budget on the 26th, we are expecting that there may be changes to the amount of tax-free cash that members can extract from pensions arrangements. A tax-free cash lump sum is a key feature of pensions arrangements and something individuals may have already factored into retirement plans.
It is also possible that there will be changes to salary sacrifice arrangements that may make contributing to a pension scheme less tax efficient ultimately impacting the amount being added to individual pension pots. In addition any work required to unpick salary sacrifice arrangements already in place will require a substantial exercise to be carried out by employers including changes to employment contracts."
Scotland data
Ann Frances Cooney, employment expert and partner at DWF, has commented on the latest labour market figures in Scotland:
"Against a challenging economic backdrop and shifting legislative frameworks, Scotland’s labour market is facing growing pressures. The estimates for July to September 2025 indicate that over the quarter, the employment and unemployment rates decreased while the economic inactivity rate increased.
The headline figures for the period show the employment rate in Scotland was estimated at 74.3%, down 0.7% over the quarter. By way of comparison, Scotland’s employment rate was below the UK rate of 75%. The unemployment rate in Scotland was 3.7%, down 0.1% over the quarter. Scotland’s unemployment rate was below the UK rate of 5%.
The early seasonally adjusted estimates for October 2025 from HMRC Pay As You Earn Real Time Information indicate that median monthly pay for payrolled employees in Scotland was £2,581, an increase of 3.6% compared with October 2024. Employers are facing intensified financial challenges as inflation climbs and Employer National Insurance contributions have risen, while employees seek remuneration that reflects growing living expenses.
With a wide-ranging package of new employment rights expected imminently under the Employment Rights Bill, employers are increasingly prioritising workforce resilience. Early action through strategic planning and compliance preparation will be critical as businesses evaluate the operational impact of these reforms and position themselves for long-term success. Many organisations are looking to the Autumn Budget for clearer policy signals and reassurance as they navigate an evolving economic and regulatory environment."
Northern Ireland data
Jonathan Simpson, director and employment expert in the employment team at DWF in Belfast, has commented on the latest NI Labour Market figures:
"While Northern Ireland presents a more positive picture than the wider UK position, recent labour market data still continues to point to a slowdown in Northern Ireland. Year-on-year changes in employment levels remain modest across all sources. While HMRC payroll figures show a rise in payrolled employees, the Labour Force Survey indicates a decline in the employment rate, alongside increases in both unemployment and economic inactivity.
Earnings from the HMRC PAYE indicated that Northern Ireland employees had a median monthly pay of £2,411 in October 2025, unchanged over the month and an increase of £130 over the year. Rising living expenses are sharpening employee focus on pay increases. Employers unable to match expectations risk workforce shifts as individuals pursue positions with greater financial security.
The latest Northern Ireland seasonally adjusted unemployment rate for the period July to September 2025 was estimated from the Labour Force Survey at 2.4%. This was unchanged over the quarter and an increase of 0.7% over the year. The incremental rise in unemployment reflects growing strains within the labour market. The proportion of people in work decreased by 0.2% over the quarter and decreased by 0.7% over the year to 71.4% - further indicating pressure within the market.
Persistent economic uncertainty and rising employment costs continue to weigh on businesses. Many organisations are looking to the Autumn Budget for clearer policy signals and reassurance as they navigate an evolving economic and regulatory environment. The Employment Rights Bill in Great Britain may be causing employers to take a more cautious approach across the rest of the UK and it remains to be seen how the ‘Good Jobs’ Employment Rights Bill, due in 2026, could shape employer sentiment in Northern Ireland over the coming months, with added compliance and cost pressures making early planning essential."
