ONS Labour Market – 136,000 People Aged 16-24 Now Unemployed, Making Up Two Thirds of New Jobseekers

• In the year to October to December 2024, the UK employment rate increased to 74.9%
• The UK unemployment rate increased to 4.4%
  The UK economic inactivity rate decreased to 21.5%
• There are now 213,000 more people out of work than a year ago
• 136,000 people aged 16-24 now unemployed – making up two-thirds of new jobseekers
• UK Claimant Count for January 2025 increased on the month and is up on the year, at 1.750 million.
• Economic Inactivity fell quarter-on-quarter to 21.5%
• Annual wage growth came in at 5.9%, versus 5.6% in the previous three months and in line with market expectations
• The estimated number of vacancies in the UK decreased by 9,000 on the quarter to 819,000 in November 2024 to January 2025.
• Vacancies decreased on the quarter for the 31st consecutive period, but are still above pre-coronavirus (COVID-19) pandemic levels.

The February 2025 Labour market overview for the UK has been released by the Office for National Statistics.

Estimates for payrolled employees in the UK decreased by 14,000 (0.0%) between November and December 2024 but rose by 44,000 (0.1%) between December 2023 and December 2024.

Payrolled employees fell by 3,000 (0.0%) over the quarter but rose by 106,000 (0.3%) over the year, when looking at October to December 2024. This is the period comparable with our Labour Force Survey (LFS) estimates.

The early estimate of payrolled employees for January 2025 increased by 21,000 (0.1%) on the month and increased by 49,000 (0.2%) on the year to 30.4 million. The January 2025 estimate should be treated as a provisional estimate and is likely to be revised when more data are received next month.

Increased volatility of LFS estimates, resulting from smaller achieved sample sizes, means that estimates of change should be treated with additional caution. We recommend using them as part of our suite of labour market indicators, alongside workforce jobs (WFJ), Claimant Count data, and Pay As You Earn (PAYE) Real Time Information (RTI) estimates.

The UK employment rate for people aged 16 to 64 years was estimated at 74.9% in October to December 2024. 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 4.4% in October to December 2024. 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 21.5% in October to December 2024. This is below estimates of a year ago, and down in the latest quarter.

The UK Claimant Count for January 2025 increased on the month and is up on the year, at 1.750 million.

The estimated number of vacancies in the UK decreased by 9,000 on the quarter to 819,000 in November 2024 to January 2025. Vacancies decreased on the quarter for the 31st consecutive period but are still above pre-coronavirus (COVID-19) pandemic levels.

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 6.0%. HM Revenue and Customs Pay As You Earn (PAYE) Real Time Indicators (RTI) pay data showed a similar annual growth rate when compared with Average Weekly Earnings (AWE) total earnings including arrear payments.

Annual growth in real terms, adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH), was 2.5% for both regular pay and total pay in October to December 2024.

There were an estimated 52,000 working days lost because of labour disputes across the UK in December 2024.

ONS highlights that Labour Force Survey (LFS) estimates have been affected by increased volatility

Labour Force Survey (LFS) estimates have been affected by increased volatility, resulting from smaller achieved sample sizes, meaning that estimates of change should be treated with additional caution.

The LFS continues to be the sole source of data for unemployment, economic inactivity and self-employment, and provides a range of breakdowns that are only possible from LFS data.

ONS highlights: As external sources are suggesting that recent increases in LFS measures of employment are likely to be overstating underlying employment growth, we expect that underlying changes in the other labour market statuses will also be affected. For example, the more modest growth we see in alternative employment sources may indicate that unemployment and economic inactivity may have moved less than the LFS has recently suggested.

 ONS Summary of the latest headline estimates and quarterly changes for regions of the UK, seasonally adjusted, October to December 2024:

Source: Labour Force Survey from the Office for National Statistics

Sector Reaction to the Latest ONS Labour Market Data for February 2025

Responding to the latest ONS figures, Stephen Evans, chief executive of Learning and Work Institute (L&W), said:

“The labour market looks fairly flat overall, not surprising given the gloomy economic outlook. HMRC data show a worrying 90,000 drop in people working in retail and hospitality over the year, offset by a similar rise in workers in health and social care. This could suggest trouble ahead in sectors likely to be most affected by rises in the minimum wage and employers’ National Insurance contributions. The Government’s upcoming green paper on disability benefits needs to widen support beyond the one in ten out-of-work disabled people who get help to find work each year.”

Rebecca Florisson, Principal Analyst at the Work Foundation at Lancaster University, a leading think tank for improving working lives in the UK said:

“Today’s figures point to a slowing labour market, with worrying signs for young people entering the labour market for the first time.

“On the face of it, there is good news for workers as regular pay is up on the year by 5.9%, with real wages also up by 2.5% on the year. Although this represents the longest run of regular pay rises above 4% since records began in 2001, the reality is most workers have not felt the benefit in their pockets. Falling GDP per head suggests that despite wage increases, living standards are not significantly improving.

“While low by historical standards, unemployment is continuing to creep up to 4.4%. There are now 213,000 more people out of work than a year ago. This is worrying for young people, with an additional 136,000 people aged 16-24 now unemployed – making up two thirds of new jobseekers.

“It also appears many employers are scaling down plans to recruit staff, just at the time when the Government is attempting to support more people into work. Vacancies have dropped by 110,000 on the year. This reduced appetite for hiring has emerged even prior to the introduction of the Government’s rise in employer National Insurance Contributions.

“However, for a Government promising to raise living standards it is more critical than ever that Ministers prioritise the measures outlined in the Employment Rights Bill, the Industrial Strategy and Get Britain Working White Paper. Any delay or dilution of their introduction will only further exacerbate the issues facing workers and job seekers, and increase the sense of uncertainty amongst employers as to the landscape within which they will be operating in the future.”

The ONS has published its latest labour market statistics this morning. The Recruitment and Employment Confederation (REC) Deputy Chief Executive Kate Shoesmith said:

“Many businesses are continuing to tread water. They are hiring, but at a slower pace than any of us would like. The increase in the number of payrolled employees and the small rise in the employment rate, both on the quarter and the year, demonstrates the resilience of businesses and the UK labour market.

“But employers need support if we are to see real growth and an uplift in the economy overall. That calls for investment, rather than cost-cutting. We need government to work with business on strategies that boost productivity, a strong Industrial Strategy that prioritises infrastructure investment and creates jobs, and skills development programmes that meet employer needs.

“The rise in pay is to be expected in an economy that still grapples with skills shortages in key roles, and should not unduly concern the Bank of England or impact interest rates in our opinion. It’s also important to avoid jumping to conclusions on pay at this point, as many pay rises typically happen in April at the start of a new tax year, and we have yet to see the true impact of the National Insurance rises that will come into play at the same time.”

Kate Shoesmith added:

“It is encouraging to see a halving of the working days lost in December 2024 due to labour disputes across the UK – down to 52,000 days from 108,000 in December 2023. We need to maintain this path as measures from the Employment Rights Bill are introduced – that should be one of the key determinants of regulations brought in. Fewer disruptions support workers as businesses can operate more smoothly, boosting productivity and creating a climate of confidence that supports growth.”

Nicholas Hyett, Investment Manager at Wealth Club, commented;

“The UK Labour market tightened a bit more than expected over the Christmas period, with unemployment lower than feared and wages rising. However, we worry that this proves a final festive blowout ahead of a painful Spring.

“Rising living wages and an increase in employers national insurance contributions, mean lots of large employers have said they may look to cut wage bills ahead of April. The supermarket sector has already reported job losses, and others are expected to follow as the changes approach.

“While a sudden flurry of job losses could take some heat out of the labour market – reducing inflation – the danger is that it leads to a spike in unemployment which impacts growth and the tax take, putting the government’s slim fiscal margins under yet more pressure. The government will be watching the next few months’ numbers through their fingers.”

Responding to today’s (Tuesday) labour market data, which show over a million workers remain on zero hours contracts, TUC General Secretary Paul Nowak said:

“A decade of inaction on insecure work has left a legacy of over a million workers on zero-hours contracts. That’s why it’s so important to improve security at work and stop these exploitative working practices. The Employment Rights Bill will rightly ban them. 

“There are some better signs in the employment data. But ministers must keep their focus on supporting jobs. The government’s industrial strategy and infrastructure plans are an opportunity to create good new jobs where they’re most needed. And job seekers need access to well-funded training and employment support.

“Steady real pay growth after years of stagnation should support consumer confidence and spending, strengthening growth.”

On youth unemployment and inactivity due to long term sickness Paul added:

“It’s good to see ministers making plans to improve opportunities for young people and disabled people to move into decent work.

“We need an approach that improves access to health services, and that gives young people genuine opportunities to earn and learn. It’s a chance to transform the lives of people who want to work but who face barriers keeping them out of employment.”  

Tom Ravenscroft, CEO at Skills Builder Partnership, said:

“Young people now make up two thirds of new jobseekers. This growth in youth unemployment should be a wake-up call—immediate action is needed to stop young people from being left behind because they lack essential skills. We know that employers are facing headwinds, but we need to be doing everything we possibly can on the other side of the equation to set our young people up with the essential skills to have a real, positive impact from the outset of their careers.

“Essential skills like collaboration, communication and self-management are consistently demanded by employers with 94% identifying them as vital, but too many young people aren’t developing them in school, leaving 18% of workers with low essential skills.

“This holds back growth to the tune of £22.2bn per year for the economy. Young people from disadvantaged backgrounds have fewer opportunities to build these essential skills that they need to succeed in life and work. The Government’s review of the national curriculum and assessment is a key opportunity to ensure that all young people build essential skills.”