UK data
The headline figures show ongoing resilience in the UK labour market despite economic pressure. The UK employment rate was estimated at 75% in January to March 2025. This is above estimates of a year ago but largely unchanged on the quarter. The UK unemployment rate was estimated at 4.5%, this is above estimates of a year ago, and up in the latest quarter.
The estimated number of vacancies in the UK fell by 42,000 on the quarter, to 761,000 in February to April 2025 – the 34th consecutive decline with quarterly falls seen in 13 out of the 18 industries. We are seeing employers across the board taking a cautious approach to recruitment with the Employment Rights Bill implementing a raft of new protection for the workforce, including making unfair dismissal a day one right.
Annual growth in employees' average regular earnings excluding bonuses in Great Britain was 5.6% in January to March 2025, and annual growth in total earnings including bonuses was 5.5%. With the hike in employer National Insurance contributions we are seeing earnings plateau as employers seek to reduce costs. However there is some movement in the market as employees change employers to seek out higher wages.
The recent fall in inflation perhaps offered the market some optimism, however, the fall is predicted to not last long and has been described as the calm before the storm. Labour intensive industries such as hospitality, retail and manufacturing are likely to face the toughest challenges in such a volatile market.
It is crucial for employers to keep up with the latest employment law developments and plan accordingly – including balancing protected characteristics following the Supreme Court decision on biological sex. Fostering a positive workplace culture and employee engagement, ensuring clear communication, and maintaining transparency are essential components for employers to stay ahead of the curve.
Scotland data
Considering the challenging ongoing economic environment and the raft of new employment legislation in the pipeline, the latest Scottish labour market figures for the period January to March 2025 show continued resilience. The estimates indicate that over the quarter, the economic inactivity rate decreased while the employment and unemployment rates increased.
The headline figures for this period show the employment rate in Scotland was estimated at 74.5%, up 0.4% over the quarter. By way of comparison Scotland's employment rate was below the UK rate of 75%. The unemployment rate was estimated at 4.3%, up 0.5% over the quarter. Scotland's unemployment rate was below the UK rate of 4.5%.
The early seasonally adjusted estimates for April 2025 from HMRC Pay As You Earn Real Time information indicate that median monthly pay for payrolled employees in Scotland was £2,533, an increase of 5.8% compared with April 2024. We are seeing employers across the board either freeze pay or significantly limit pay increases to help combat the increase in employer National Insurance contributions and rising costs.
As we are about to enter the summer months we may see some buoyancy in the market, particularly in sectors such as hospitality where business often improves with the better weather. It is questionable what impact the recent fall in inflation will have on the market with analysts predicting the reduction to be short lived.
It is essential for employers to keep on top of the forthcoming employment law developments. Now more than ever employers must focus on engaging the workforce, fostering a positive workplace culture and creating a sense of "we are in this together".
Northern Ireland data
The most recent labour market figures for Northern Ireland show continuous strength in the face of a challenging economic backdrop. The figures show that over the year both payrolled employee numbers and earnings have increased.
From the Labour Force Survey, the unemployment rate saw a decrease. However, the employment rate has also decreased, and the economic inactivity rate has increased which may indicate a degree of stagnation in the market.
Earnings from HMRC PAYE indicated that Northern Ireland employees had a median monthly pay of £2,427 in April 2025, an increase of £17 over the month and an increase of £238 over the year. Balancing demands for increased pay with rising costs is an ongoing juggle for employers.
The latest Northern Ireland seasonally adjusted unemployment rate for the period January to March 2025 was estimated at 1.6%. This represents a decrease of 0.1% over the quarter and a decrease of 0.5% over the year. The proportion of people in work decreased by 0.6% over the quarter and decreased by 1.4% over the year to 71.6%.
The outcome of the "Good Jobs" Employment Rights Bill consultation was released last month and provided some clarity on upcoming changes in employment law for employers in Northern Ireland. As always with times of change, employee engagement, transparency and a positive workplace culture are all key so that employers and employees can navigate the new legislation together. Now is the time for employers to review and update their contracts, policies, and procedures to ensure they are prepared for the forthcoming changes.
