Jobs market still too slow but wages gradually picking up pace

Unemployment held steady at 5.1 per cent last month, while real pay packets grew slowly at the end of last year, the Resolution Foundation said today (Tuesday) in response to the latest ONS labour market statistics. 

The number of payrolled jobs fell once again in November and December (by 33,000 and 43,000, though the latter is likely to be revised) and has now fallen by 184,000 over the past 12 months. As a result, the Foundation’s employment rate estimate has fallen to 75.3 per cent – down from its peak of 76.6 per cent in mid-2023.  

The latest data shows that vacancies have stopped falling, indicating that unemployment may also have peaked for the time being – while remaining too high.  

The level of real pay started to rise again at the end of last year, but slowly, with regular weekly earnings (excluding bonuses) growing at just 0.6% after accounting for inflation in the three months to November 2025, compared to the previous year. In the year leading to last November, average weekly earnings rose by less than a fiver – just £4.98 in real terms – barely enough to cover the cost of high-street meal-deal. 

Looking at short-term (annualised three-month) changes in the private sector between June-August and September-November 2025, wage growth ticked up to 3.0 per cent. This is still a rate that the Bank of England’s MPC will see as broadly consistent with on-target inflation. 

Charlie McCurdy, Economist at the Resolution Foundation, said:  

“The labour market is continuing to sputter along with high unemployment, and mixed signals as to whether it might be about to turn a corner. 

“With unemployment holding steady – at its highest level in a decade, outside of the pandemic – the question is whether it will lead the Bank of England to cut rates, and how the Government can support people struggling to find work. 

“The good news is that real wages were growing at the end of last year – albeit not fast enough to prohibit the ongoing cutting of rates.”