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October's UK Jobs Report: Breakdown of Key Figures (June–August 2025)
- Helen
- Oct 16
- 11 min read
Summary: Jobs market is slowing down, but wages are still high
Looking at the UK job market from June to August 2025 shows a mixed picture. The market is getting looser—meaning it's easier to find staff—because unemployment is up and there are fewer job openings. However, wages are still growing fast. This mix suggests a difficult economic situation: growth is slowing down, but price inflation is sticking around.
The main numbers show things are softening: the employment rate for the main working age group dropped, and the unemployment rate significantly increased.1 Other data supports this, like the continued fall in job vacancies and a small decrease in the number of workers on company payrolls (Pay As You Earn, or PAYE).2
The biggest worry is who is driving the job growth. The only net increase in the total employment level comes from people 65 years and over and people taking on part-time employment.1 This reliance on older workers and part-time jobs hides the fact that the key working-age population (aged 16 to 64) is not growing its productivity. Also, a serious long-term problem is the number of people out of work due to long-term sickness, which is growing, especially for the core working group aged 25–49 years.1 These ongoing issues create major risks for the government's finances and the nation's ability to produce goods and services long-term.
Why we need to be careful with these numbers
A. Warning: The data quality is not perfect
To properly understand the UK job market data, we must first look at the main source, the Labour Force Survey (LFS), and acknowledge its limits.
The Office for National Statistics (ONS) strongly and repeatedly advises caution when looking at the LFS figures.1 Because of ongoing issues with how many people respond to the survey, these LFS-based statistics are currently labeled as "official statistics in development".1 This shows there's a serious, long-lasting problem with how the UK measures its workforce. The ONS expects that the LFS numbers will continue to be more volatile (unstable) from mid-2023 and throughout 2024, so changes during those times should be looked at very carefully.1
The ONS has made changes to its methods, and figures from January to March 2025 include the full impact of these updates from January 2024. However, more changes are coming and might affect future estimates.1 The fact that these strong warnings are needed confirms the data changes too much to be reliable. Using flawed data creates high risk for policymakers, as big decisions about interest rates, welfare, and government spending could be based on inaccurate information.2
B. Checking the data against other sources
Because the LFS data is weak, the ONS suggests viewing these figures alongside a comprehensive "suite of labour market indicators".1 These include Workforce Jobs, the Claimant Count, and the PAYE Real Time Information (PAYE RTI) figures, which together give a clearer view.1
Checking these other sources confirms the market is getting looser. Job vacancies kept falling, dropping by 9,000 to a total of 717,000 in the three months to September 2025.2 This continued fall in hiring demand shows businesses are getting more cautious. Also, HMRC figures showed a drop of 10,000 in the number of workers on company payrolls in September.2 Although the ONS mentioned that the rate of decline might be slowing after earlier, sharper drops 2, the movement in both vacancies and PAYE data supports the idea that the job market is steadily returning slack. Separately, the unadjusted Claimant Count stood at 1,697,200 in August 2025 4, reflecting a high, albeit lower year-on-year, underlying level of benefits demand.
The main numbers: June to August 2025 figures explained
A. Employment rate is down, but total jobs are up (and that’s a problem)
The estimated UK employment rate for people aged 16 to 64 dropped by 0.2 percentage points (pp) from the last quarter, reaching 75.1%.1 This shows a clear softening for the main workforce.
Importantly, the total number of people in employment (aged 16 and over) actually went up by 91 thousand this quarter, reaching 34,221 thousand.1 This is confusing—how can the rate fall while the total number rises? It's because fewer people aged 16 to 64 are working. The total increase came only from older workers and different types of jobs.1 Specifically, the entire net increase was largely due to people aged 65 years and over and part-time employees.1 This means the country is relying too heavily on people delaying retirement to keep the job numbers looking good, which hides the stagnation or decline in participation among the prime working-age population.
B. Unemployment is clearly increasing
The unemployment rate provides the clearest signal of market loosening. The estimated UK unemployment rate went up by 0.2 pp compared to the last quarter, hitting 4.8% in June to August 2025.1
This rise in the rate means the number of unemployed people grew by 64 thousand this quarter, reaching a total of 1,737 thousand.1 The rise in unemployment is even stronger over the whole year: the level jumped substantially by 297 thousand compared to the year before, which is a 0.7 pp rise in the unemployment rate.1 This significant annual acceleration suggests that unemployment, a typically lagging indicator, is now catching up and showing the impact of the mild recessionary pressures and sustained declines in hiring activity indicated earlier by falling job vacancies.
C. People not working (inactivity): The rate looks stable, but the reasons are changing
The rate of economic inactivity for people aged 16–64 was largely unchanged on the quarter, staying at 21.0%.1 Although the rate looks steady, the reasons why people are out of the workforce are changing in worrying ways.
This quarter saw fewer people aged 16 to 24 (likely students) and 50 to 64 out of work.1 But these positive changes were offset by a critical quarterly increase in inactivity among the 25 to 49 age group.1 Looking over the whole year, while the overall inactivity rate decreased (due to fewer students and the 50 to 64 group), the number of people out of work aged 35 to 49 years increased over the year.1 The fact that people in the most important working age group (25-49) are becoming less attached to the job market is a severe structural problem, as this group is generally the most stable and productive segment of the labour force.
This table summarises the main LFS figures, including the range of sampling variability published by the ONS for quarterly changes. This range shows the high level of uncertainty in the current data.1
Key Labour Market Indicators and Quarterly/Annual Variability (June–August 2025)
IV. Changes in job types and who is working
A. More older workers and part-time jobs
As previously noted, the entire net increase in the aggregate employment level was largely sustained by two groups: those aged 65 years and over and part-time employees.1 This heavy reliance on part-time work suggests people might be underemployed (wanting more hours but unable to find them) or that the available jobs are generally lower-intensity roles.
For older workers, the persistent high inactivity rate for those aged 50 to 64 (26.1% in 2025) has decreased by 1.2 pp in the last year.6 While this shows some success in keeping or bringing older workers back, the fundamental issue remains that the core growth engine for employment is located outside the prime working age, creating a drag on long-term productivity potential. If employment growth is structurally limited to older demographics and flexible roles, the average productivity of the workforce is likely to decline, and the reliance on a shrinking core working-age tax base will increase the fiscal burden associated with structural economic issues.
B. Second jobs show financial pressure
The continued high number of people working a second job suggests they are doing so out of financial necessity, not just optional preference. The number of people holding a second job reached 1.323 million, representing 3.86% of people in employment.1 While this number decreased slightly quarter-on-quarter, it increased significantly over the year.1
A consistently high and annually rising level of second jobs, even with robust nominal wage growth (as discussed in Section VI), indicates that the income from primary employment is often insufficient to meet rising household costs fueled by persistent inflation. This suggests a weak underlying demand environment, where households are maximising labour input defensively to maintain standards of living, rather than a market expanding high-quality, high-wage full-time opportunities.
The biggest problem: long term sickness
A. The numbers on sickness
The scale of the problem is substantial: the number of people out of work due to long-term sickness has risen to over 2.5 million individuals (as of early 2023), marking an increase of over 400,000 since the beginning of the COVID-19 pandemic.3 This makes long-term sickness the primary and most common reason for economic inactivity.7
These cases are very complicated, meaning simple back-to-work programs probably won't work. Nearly two-fifths (38%) of those inactive due to long-term sickness reported having five or more health conditions, suggesting interlinked and highly complex health issues that require integrated clinical and employment support.3 Specific clinical factors are critical, with over 1.35 million (53%) of the sick inactive population reporting issues related to depression, bad nerves, or anxiety.3 Alarmingly, for over 1 million of these individuals, these mental health conditions are secondary in nature, reinforcing the extensive co-morbidity present.3 Since the pandemic, there have also been notable increases in conditions related to the back and neck (up 31%).8
B. Which age groups are getting sick?
The composition of inactivity is becoming particularly concerning due to the deterioration within the core working population. The quarterly and annual rise in economic inactivity among the 25 to 49 age group is a significant alarm signal.1 As this cohort is less likely to be inactive due to early retirement or student status, the increase strongly suggests that chronic health issues are now actively derailing careers during peak earning and productive years.
While older workers show some improvement (annual decrease in the 50-64 age group) 1, the quarterly decreases in those inactive because they are students or retired were largely offset by increases for those inactive for non-categorised reasons or those who are long-term sick.1 The shift in the composition of the inactive population from cyclical factors (students, retirement, family care) to complex clinical factors (long-term sickness) transforms the issue from a labour market tightness problem into a fundamental public health and macroeconomic emergency.
C. The financial cost
Failing to resolve this crisis is costing the economy a lot of money. The Office for Budget Responsibility estimates that the rise in working-age economic inactivity, driven largely by worsening health, has added an estimated £15.7 billion to annual government borrowing since the pandemic began.9
The magnitude of this fiscal drain confirms a systemic failure in work-related health support. The relationship between health and work is bidirectional: good work improves health, and poor health prevents work.9 Given the complexity of the conditions now driving the issue, the policy priority must shift to integrated health and work interventions, providing rapid support for individuals whose health is deteriorating to prevent permanent exit from the workforce.9
Wages and inflation: why pay still feels low
A. Wages are going up fast (Nominally)
For the period June to August 2025, annual growth in employees’ average regular earnings (nominal, Great Britain, excluding bonuses) was measured at 4.7%.1 This figure represents a slight deceleration from the 4.8% recorded in the prior three-month period.1 Annual growth in total earnings (nominal, including bonuses) stood at 5.0%, marginally increasing from the previous period (4.8%), primarily due to slightly higher bonus payments in August 2025 compared to the year before.1
Complementary data from PAYE RTI reinforces the view of robust nominal wage momentum, with early estimates for median monthly pay in August 2025 showing a substantial increase of 6.6% compared with August 2024.1 While segmentation data suggests public administration and defense reported the highest growth (8.6% in July 2025), indicating potential public sector catch-up effects 10, the overall aggregate nominal growth remains elevated.
B. Real pay is barely growing
When nominal pay is deflated by inflation, it becomes clear that these gains are overwhelmingly compensatory, serving to protect purchasing power rather than expanding real demand. Using the Consumer Prices Index including owner occupiers' housing costs (CPIH) as the deflator, annual growth in real regular pay was only 0.6%.1 Real total pay growth was also marginal, reaching 0.8%.1
Using the Consumer Prices Index (CPI) for comparison, real regular pay growth was measured at 0.9%, and real total pay growth was 1.2%.1 These low real growth figures confirm that although firms face high labour costs (the 5.0% nominal rate), households are only just maintaining parity with inflation. The persistent high nominal wage growth thus primarily contributes to cost-push inflation rather than strong demand-pull inflation, complicating the efficacy of aggressive monetary tightening.
Annual Average Weekly Earnings Growth (Great Britain: June–August 2025)
What this means and what should be done
A. Outlook: Slowdown continues, weakness is structural
The near-term forecast suggests the labour market will continue its gradual trend of loosening. Rising unemployment (4.8%) and continued declines in job vacancies point toward increasing slack in the economy, a process supported by data indicating a decline in company payrolls.2 While high nominal pay growth remains an inflationary anchor, the marginal real pay gains and the compositional shifts toward lower-intensity or necessity-driven employment suggest underlying economic weakness.
For the Bank of England, the policy challenge is acute. While rising unemployment should temper future wage demands, the current 5.0% nominal growth rate is still too high. The central bank must balance the risk of anchoring high inflation expectations against the danger of triggering a deeper recession by excessively tightening policy in an environment where employment growth is already fragile and heavily reliant on specific demographic groups. The reliance on older workers and the loss of prime-age workers due to chronic illness fundamentally limit UK productivity growth potential, leading to a sustained, low-growth equilibrium.
B. What policymakers need to fix
1. Fix the sickness crisis with health support
Given the sheer scale and complexity of the long-term sickness crisis (over 2.5 million inactive, costing the government £15.7 billion a year) 7, general back-to-work schemes are inadequate. Policy must prioritise a clinically integrated approach, focusing on rapid access to specialised support for conditions driving inactivity, particularly complex mental health issues and musculoskeletal disorders.9 Interventions must be tailored to support individuals with multiple, complex conditions (up to five or more) 3 and must focus on retaining workers in employment by providing support before conditions become chronic.
2. Help the key working age group
The quarterly and annual increase in inactivity among the 25 to 49 age group 1 demands immediate, targeted investigation and intervention. This cohort represents the highest productive capacity, and their exit from the labour force erodes future skills capacity and heightens dependency ratios. Policies for this group must focus on health maintenance and career support mechanisms specific to preventing career derailment by chronic illness.
3. Fix the data problems
The sustained designation of the LFS as "official statistics in development" 1 is unacceptable for a major advanced economy. Effective management of macroeconomic risk, particularly the complex structural issues identified, requires policymakers to have access to reliable, robust statistical data. Significant public investment must be immediately directed towards stabilising and improving the accuracy and methodology of the UK's core labour market metrics to overcome this "flying blind" scenario.2
Works cited
Employment in the UK - Office for National Statistics, accessed on October 15, 2025, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/employmentintheuk/october2025#main-points
UK labour market shows signs of stabilising after job losses, accessed on October 15, 2025, https://www.theguardian.com/business/2025/oct/14/uk-labour-market-job-losses-unemployment-ons
Rising ill-health and economic inactivity because of long-term sickness, UK: 2019 to 2023, accessed on October 15, 2025, https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/economicinactivity/articles/risingillhealthandeconomicinactivitybecauseoflongtermsicknessuk/2019to2023
People claiming unemployment benefits by constituency - UK Parliament, accessed on October 15, 2025, https://researchbriefings.files.parliament.uk/documents/CBP-8748/CBP-8748.pdf
accessed on October 15, 2025, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/employmentintheuk/october2025#:~:text=In%20June%20to%20August%202025,with%20March%20to%20May%202025.
Economic labour market status of individuals aged 50 and over, trends over time - GOV.UK, accessed on October 15, 2025, https://www.gov.uk/government/statistics/economic-labour-market-status-of-individuals-aged-50-and-over-trends-over-time-september-2025/economic-labour-market-status-of-individuals-aged-50-and-over-trends-over-time-september-2025
Understanding recent trends in ill health-driven fallout from the UK job market, accessed on October 15, 2025, https://www.som.org.uk/sites/som.org.uk/files/SOM_Deep_Dive_Research-compressed.pdf
Briefing: The Rise in Economic Inactivity due to Ill Health, accessed on October 15, 2025, https://phw.nhs.wales/services-and-teams/healthy-working-wales/reports/the-rise-in-economic-inactivity-due-to-ill-health/
How can the next government improve the health of the workforce and boost growth?, accessed on October 15, 2025, https://www.health.org.uk/reports-and-analysis/briefings/how-can-the-next-government-improve-the-health-of-the-workforce-and
Earnings and employment from Pay As You Earn Real Time Information, UK: August 2025, accessed on October 15, 2025, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/earningsandemploymentfrompayasyouearnrealtimeinformationuk/august2025
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