UK data
The UK labour market is facing increasing ongoing economic pressure with the latest figures showing a resilient but nuanced picture. On the positive side, the UK employment rate was estimated at 75.2% in March to May 2025. This is above estimates of a year ago, and up in the latest quarter. The UK unemployment rate for the same period was estimated at 4.7%, above estimates of a year ago, and down in the latest quarter.
However, the estimated number of vacancies in the UK fell by 56,000 on the quarter, to 727,000, in April to June 2025 – the 36th consecutive fall. Few sectors are untouched by the decline, with vacancies decreasing in 14 of the 18 industry categories. UK businesses are scaling back recruitment and choosing not to replace departing staff, leading to a sharp drop in job vacancies, according to the official data. This trend is perhaps unsurprising with the raft of new employment protections on the horizon leading employers to taking a cautious approach to recruitment.
In March to May 2025, annual growth in employees' average earnings in Great Britain for both regular earnings (excluding bonuses) and total earnings (including bonuses) was 5%. Annual average regular earnings growth was 5.5% for the public sector and 4.9% for the private sector. This shows that, with the rise in employer National Insurance contributions, wage growth has begun to level off as businesses look to manage costs. When viewed alongside the reduced number of job vacancies, this suggests a level of concern amongst employers who also face a further challenge - the ONS has reported that the UK's inflation rate has risen to 3.6% in the year to June, an increase from 3.4% in May. This unexpected increase in inflation will put pressure on employers to raise pay as employees' purchasing power drops.
With the cost of living crisis biting, employers will need to find new and innovative ways to help support their staff and inspire loyalty in a volatile market. Building a positive culture, engaging employees, and communicating transparently are key to staying competitive.
Scotland data
Scotland's labour market shows continued resilience in an uncertain economic climate. The estimates for March to May 2025 indicate that over the quarter, the employment rate increased while the unemployment and economic inactivity rates decreased.
The headline figures for this period show the employment rate in Scotland was estimated at 74.9%, up 0.6% over the quarter. By way of comparison, Scotland's employment rate was below the UK rate of 75.2%. The unemployment rate in Scotland was 3.7%, down 0.5% over the quarter. Scotland's unemployment rate was below the UK rate of 4.7%.
The early seasonally adjusted estimates for June 2025 from HMRC Pay As You Earn Real Time Information indicate that median monthly pay for payrolled employees in Scotland was £2,546, an increase of 5.4% compared with June 2024. With UK inflation unexpectedly jumping to 3.6% in June 2025, employers are likely to face further pressure from employees to increase pay with prices rising quickly.
Overall, the market has remained relatively buoyant, reflecting a degree of stability despite broader economic uncertainty. However, the imminent introduction of a raft of new worker rights is expected to influence employer behaviour in the months ahead. In addition, as businesses prepare to grapple with the financial impact of US tariffs, many are adopting a more cautious approach to recruitment, reassessing workforce strategies and reviewing internal policies to ensure compliance.
Northern Ireland data
The latest labour market figures for Northern Ireland show a mixed picture against a difficult economic backdrop. The figures show that over the year both payrolled employee numbers and earnings have increased. Strength in formal employment and wage growth are both positive indicators. However, the unemployment rate and economic inactivity rate both saw an increase, while the employment rate decreased. More people are actively looking for work but unable to find it, suggesting some cooling in the market.
Earnings from HMRC PAYE indicated that Northern Ireland employees had a median monthly pay of £2,344 in June 2025, a decrease of £28 over the month and an increase of £26 over the year. With food prices rising and UK inflation taking an unexpected hike in June 2025 we are likely to see employees seeking higher wages. Quite simply it costs more money to live. If employers cannot meet the increased wage demands, we may see some movement in the market as employees may be forced to search for other roles for higher pay.
The latest Northern Ireland seasonally adjusted unemployment rate for the period March to May 2025 was estimated at 2.1%. This represents an increase of 0.6% over the quarter and 0.3% over the year. This significant increase is indicative of some struggle in the labour market. The proportion of people in work increased by 0.7% over the quarter and decreased by 0.7% over the year to 72.1%. Again, demonstrating some stalling within the labour market. The yearly decline in employment and rise in unemployment suggests that the labour market is not keeping pace with demands for jobs, possibly due to economic uncertainty and the forthcoming enhanced worker protection under the impending "Good Jobs" Employment Rights Bill.
Recent reports from an Ulster Bank survey show that business activity across Northern Ireland fell slightly in June 2025. However, there is room for some optimism as firms surveyed reported an increase in recruitment – the first increase since January 2025.
