Unemployment hits 5 per cent for first time – outside of the pandemic – in almost a decade 11 November 2025 The labour market is weakening on multiple fronts with the number of payrolled jobs falling by 64,000 in the past two months, short-term private sector pay growth falling to 2.7 per cent, and unemployment hitting 5 per cent for the first time (outside of the pandemic) since 2016, the Resolution Foundation said today. The number of payrolled jobs fell by 32,000 in each of September and October (though initial data points are prone to revision), and including those months has now shed 180,000 jobs since its peak in October 2024. The biggest fall in the past three months has taken place in London – with payrolled jobs held by people living in London down 20,100 – a bigger fall than any other region in both absolute and proportional terms. As a result, the Foundation’s employment rate estimate has fallen to 75.1 per cent – down from its peak of 76.6 per cent in mid-2023. The flipside of falling employment is unemployment hitting 5 per cent. The unwanted landmark has come around far quicker than either the Bank of England or Office for Budget Responsibility forecast, says the Foundation. The only silver lining is that the number of job vacancies appears to have stabilised at 723,000, at least temporarily, and at below pre-pandemic levels of 819,000. Pay growth also continues to weaken. Looking at the short-term annualised three-month change, private sector pay growth fell to 2.7 per cent in September – significantly below the rate of inflation. After adjusting for inflation, the overall level of weekly pay has grown by just £3 over the past 12 months. Nye Cominetti, Principal Economist at the Resolution Foundation, said: “The UK labour market is weakening on all fronts. The number of jobs in the economy continues to fall, unemployment has hit five per cent for the first time in almost a decade – pandemic period aside – and pay growth is weakening too. Only the stabilisation of vacancies points in the other direction. “The risk is that the labour market downturn is more than just a blip based around the big tax rises on firms this April and could continue to worsen in the coming months. The Chancellor should aim to protect workers from more pain in her upcoming Budget and avoid adding further costs to employers.”
