The recent report from the Office for National Statistics (ONS) reveals a slight uptick in the UK unemployment rate, which has risen to 5.1% for the three months leading up to October 2025. This marks an increase from 5% reported for the preceding three-month period ending in September. Such data signals a noteworthy shift in the labor landscape, suggesting a “subdued labor market” according to the ONS. This rise in unemployment correlates with a stagnation in hiring, portraying a challenging economic environment for job seekers.
In parallel to the increase in unemployment, average wage growth stands at an intriguing 4.6%, excluding bonuses, from August to October of the current year. This figure is predominantly influenced by pay raises negotiated in the public sector. However, the annual average earnings growth has faltered somewhat, declining from 4.2% to 3.9%. While private-sector wage growth has escalated from 6.6% to 7.6%, the current economic scenario underscores the complexities within the job market and the disparate experiences of employees across various sectors.
Liz McKeown, the ONS director of economic statistics, highlighted that the observed figures indicate a weakening labor market. She pointed out the decline in payroll numbers, suggesting a significant drop in hiring activity which has been particularly pronounced among younger age groups. This demographic shift raises concerns, as younger workers often face more volatility and fewer opportunities in a challenging economy.
One of the gravest implications of these statistics is the impact on young workers, who are described by various experts as facing the toughest challenges in the current job climate. James Reed, the CEO of Reed Recruitment, voiced skepticism about the prospects of hiring in the immediate future. He expressed concern over the direction of primary labor market indicators, questioning whether the situation had reached its nadir. The rise in the minimum wage, while beneficial for those currently employed, poses dilemmas for employers in terms of hiring new, inexperienced workers.
Meerah Nakaayi, a 22-year-old Londoner with a background in policy work, exemplified the plight of young job seekers. Despite having completed a two-year apprenticeship followed by two years in the field, she has found herself unemployed since June. Meerah emphasized the overwhelming competition for roles, evidenced by one instance where 290 applicants vied for a single policy analyst position. Her story encapsulates the frustration and demotivation experienced by many in her age group as they navigate the competitive job landscape.
KPMG UK’s chief economist, Yael Selfin, elaborated on the situation, indicating that prospects for hiring younger workers remain bleak. She noted that the deceleration in private sector wage growth is symptomatic of significantly lowered hiring activity among businesses. This trend amplifies the challenges faced by young individuals entering the workforce amidst economic uncertainty.
In response to the ONS findings, Secretary of State for Work and Pensions Pat McFadden recognized the formidable challenges the government faces. McFadden outlined an investment of £1.5 billion aimed at generating 50,000 apprenticeships and 350,000 job opportunities for young people, intended to provide real work experiences and enhance employability.
The opposition, represented by Shadow Work and Pensions Secretary Helen Whately, underscored a contrasting narrative, linking the government’s economic policies to what she termed “growth-killing policies.” Her criticism centers on the potential for rising unemployment leading to hardship for families, particularly during the holiday season.
As the UK navigates through this fluctuating economic terrain, the increase in unemployment and the distinct challenges faced by young workers illuminate a pressing need for robust policy interventions aimed at revitalizing the labor market. The unfolding situation not only highlights the necessity for systemic changes but also the importance of creating supportive frameworks to encourage hiring, particularly for those at the threshold of their career journey.
