ONS Labour Market Overview June 2025. Vacancies Now 59,000 Below Pre-Pandemic Levels!

The latest ONS Labour Market Overview has been released today (Tuesday 10th June 2025). Estimates for payrolled employees in the UK decreased by 55,000 (0.2%) between March and April 2025 and fell by 115,000 (0.4%) between April 2024 and April 2025.

When looking at February to April 2025, the period comparable with our Labour Force Survey (LFS) estimates, payrolled employees fell by 78,000 (0.3%) over the quarter and fell by 51,000 (0.2%) over the year.

The early estimate of payrolled employees for May 2025 decreased by 109,000 (0.4%) on the month and decreased by 274,000 (0.9%) on the year to 30.2 million. Early estimates are subject to significant revisions as more returns are received by HMRC next month.

Headline stats for June’s ONS Labour Market Overview:

• UK Claimant Count for May 2025 increased to 1.735 million
• The estimated number of vacancies in the UK fell by 63,000 on the quarter, to 736,000 in March to May 2025. This was the 35th consecutive quarterly decline with quarterly falls seen in 14 out of the 18 industry sectors.
• Vacancies were 59,000 below their January to March 2020 level.
• The UK employment rate for people aged 16 to 64 years was estimated at 75.1% in February to April 2025. This is above estimates of a year ago, and up in the latest quarter.
• The UK unemployment rate for people aged 16 years and over was estimated at 4.6% in February to April 2025. This is above estimates of a year ago, and up in the latest quarter.
• The UK economic inactivity rate for people aged 16 to 64 years was estimated at 21.3% in February to April 2025. This is below estimates of a year ago, and down in the latest quarter.
• The UK Claimant Count for May 2025 increased on the month and the year, to 1.735 million.

Feedback from the ONS Vacancy Survey suggests some firms may not be recruiting new workers or replacing workers who have left.

The estimated number of vacancies in the UK fell by 63,000 on the quarter, to 736,000 in March to May 2025. This was the 35th consecutive quarterly decline with quarterly falls seen in 14 out of the 18 industry sectors. Vacancies were 59,000 below their January to March 2020 level. Feedback from the ONS Vacancy Survey suggests some firms may not be recruiting new workers or replacing workers who have left.

Annual growth in employees’ average regular earnings was 5.2%

Annual growth in employees’ average regular earnings excluding bonuses in Great Britain was 5.2% in February to April 2025, and annual growth in total earnings including bonuses was 5.3%. Annual average regular earnings growth was 5.1% for the private sector and 5.6% for the public sector. RTI pay data is also published, and provides a provisional timelier estimate of median pay. The two data sources generally trend well for mean total pay.

The number of Workforce Jobs in the UK was estimated at 37.1 million in March 2025. This is an increase of 187,000 (0.5%) from December 2024, and an increase of 304,000 (0.8%) from the level of a year ago.

Employment in the public sector was estimated at 6.15 million in March 2025, an increase of 7,000 (0.1%) compared with December 2024, and an increase of 35,000 (0.6%) compared with March 2024.

There were an estimated 47,000 working days lost because of labour disputes across the UK in April 2025.

Sector Reaction

Stephen Evans, Chief Executive of Learning and Work Institute (L&W), said:

“Warning signs are growing in the labour market with payroll employees falling 274,000 compared to a year ago and vacancies now 83,000 below pre-pandemic levels. Payroll employment fell particularly sharply in retail and hospitality, down 200,000 on last year. This could reflect a combination of economic and international uncertainty and rising employer costs like the minimum wage and national insurance. But the figures are subject to substantial revision so we should be cautious in drawing conclusions. The Chancellor’s Spending Review needs to help chart a course to long-term growth, including raising employment and living standards.”

Ben Harrison, Director of the Work Foundation at Lancaster University, a leading think tank for improving working lives in the UK:

“As the Government finalises its Spending Review, today’s figures paint a picture of a weakening labour market that could undermine their ambition of boosting employment during the remainder of the Parliament.

“Regular nominal pay is still rising above inflation, but is on a downward trajectory. There is good news for workers in traditionally low paid sectors such as wholesale and retail who have seen wages rises by 7.7%, in part fuelled by the National Living Wage increase in April. But overall, the growth in the real value of pay has fallen to its lowest level for 18 months at 1.4%.

“In recent years, pay increases have masked the underlying challenges facing the UK labour market. Early estimates for the number of payrolled employees suggest these continue to decline into May. And the unemployment rate is now at 4.6%, the highest level for nearly four years. This may be driven by some people coming out of economic inactivity and starting to look for jobs. But with a simultaneous decline in payrolled employment and a reduction in vacancies, this could prove to be a challenging jobs market to find work in.

“Vacancies continued to decline, down 63,000 (7.9%) on the quarter and down 150,000 (16.9%) on the year. There are now 2.2 unemployed people for each available job, with jobseekers navigating the most competitive jobs market since February-April 2021 – when the economy was recovering from the impact of the Covid-19 pandemic.

“Today’s data underscores the importance of Government committing the investment and funding required to support more people into the labour market in the Spending Review. It’s vital that alongside an extra £1 billion for additional employment support programmes, the Government reverses plans to cut nearly £5 billion of welfare spending. These cuts stand to make it much more difficult for those with long-term health conditions to access sustainable employment in the future.”

The Recruitment and Employment Confederation (REC) Chief Executive Neil Carberry said:

“These figures remind us of the old adage that the jobs market shadows the economy, a few months behind. A tough winter, as firms struggled to grow was compounded by increases in NI, the tax on jobs. More recent employer surveys are somewhat more hopeful, but these figures emphasise again the need for the government to support businesses through a truly effective industrial strategy. Making sure that unnecessary additional burdens on hiring are removed from the Employment Rights Bill will be vital, especially as today’s numbers suggest more workers who were previously inactive are trying to return to work.”

Jack Kennedy, Senior Economist from Indeed said:

“The labour market continues to soften as hiring appetite weakens. It’s one characterised by widespread caution, with the dampening impact of April’s rise in employer costs reinforced by global headwinds and uncertainty over the Workers’ Rights Bill. 

“The sharper than expected falls in wage growth and payrolled employment suggest a more material pace of cooling may be starting to emerge, which could open the door to a faster pace of interest rate cuts from the Bank of England.

“Though the Chancellor is expected to announce increased expenditure on infrastructure, defence and healthcare in tomorrow’s Spending Review, limited fiscal headroom means any associated jobs lift will likely be modest.

Dr. Andrea Barry, Principal Economist at Youth Futures Foundation, emphasises the scale of the challenge:

“Today’s labour market data from ONS shows that youth unemployment continues to rise. Over the last year, the unemployment rate for the 16–24-year-old population not in full-time education has increased from 12.2% to 12.7%, an additional 16,300 young people.

“Compared to two years ago when the unemployment rate for young people not in full-time education was 10.4% and the economy was recovering from the pandemic; 69,000 more young people are unemployed. Meanwhile, the economic inactivity rate for young people not in full-time education has risen to 20.8%, a consistent trend since 2021.

“This demonstrates how youth unemployment continues to be a persistent issue, carrying potentially drastic consequences for a generation of young people. We know that being out or work and education can have a scarring effect on young people even decades later, impacting their wellbeing, future prospects, and carries an enormous economic cost as long as it remains unsolved. But by reducing our NEET rate to that of the Netherlands, approximately 500,000 more young people across the UK would be in work or education – a £69bn boost to the UK’s economy.

“Last month, the Government launched its eight Youth Guarantee trailblazers and announced initial reforms to refocus apprenticeship funding towards young people. These are positive first steps, but tackling a public policy challenge of this magnitude will require more. As the What Works Centre for Youth Employment, we will continue to work with government to ensure solutions to get more marginalised young people into good work are based on evidence.”

David Morrison, Senior Market Analyst at FCA-regulated fintech and financial services provider, Trade Nation, comments:

“The UK Labour Market June 2025 report shows a slight rise in the unemployment rate to 4.6% and a slowdown in wage growth, with annual regular pay growth decreasing to 5.4%. Job vacancies fell by 42,000 to 761,000, continuing a downward trend, while economic inactivity dropped to 21.4%. However, the ONS has warned about data reliability due to reduced survey response rates, which could affect the accuracy. A revamped Labour Force Survey is expected by 2027 to improve this. Overall, while the labour market is cooling, the decline in inactivity offers some optimism, however caution is advised due to data concerns.

Isaac Stell, Investment Manager at Wealth Club, commented;

“The UK labour market is at a crossroads with the unemployment rate ticking higher and hitting its highest rate since July 2021. Wage growth, albeit firmly ahead of inflation also continues to slow.

“This latest batch of data should come as no surprise. Businesses have been burdened with not only a huge rise in their national insurance bills but also rising wage bills following the increase to the national minimum wage in April. Consecutive months of rising unemployment, therefore, were inevitable as businesses look to manage their costs in the face of fiscal pressure.

“These added costs will likely trickle down into the real economy in due course, as declining wage growth will likely dampen the UK consumers animal spirits as they look to tighten their belts during uncertain times. With the likelihood of further tax rises due in the autumn businesses are also likely to put investment plans on ice. The outlook for UK PLC remains very uncertain.”