New labour market statistics from HM Government tell a different story. From January to March 2025 alone, the unemployment rate increased by 2.2 percentage points, climbing to 4.5% and marking its highest level since August of 2021. The amount of people working multiple jobs has jumped by nearly a third. It currently accounts for just 3.9% of the entire workforce of the country.
It is during this time that private sector wage growth stagnated. Average weekly earnings including bonuses rose by an inflation-busting 5.5% YOY to £722, their highest ever level. For all private sector regular pay excluding bonuses grew by 5.6% on the year to £671 per week. Increases like these contributed to overall wage growth in the UK slowing in the three months up to March 2025. This trend has alarmed economists and business leaders alike.
The report claims an increase of 112,000 new jobs which brings the total number of employed people to 34 million. The bad news is the growing unemployment numbers, which has begun to overtake even this good news. The share of people out of work for long stretches has grown. This counts those unemployed for six months, six to twelve months, and over twelve months, illustrating deep scars in the labor market.
In state and local governments, the public sector, wages increased at an annual rate of 5.5% over this time. The hospitality industry, particularly hotels and restaurants, pushed the wage growth pace along with an astounding 6.9% annualized growth. Right behind the FIRE sector was the construction industry, with a healthy 6.4% increase. For the non-farm services industry, growth was through the roof, with rising wages at 5.6%. In comparison, finance and business services experienced only a 4% wage increase.
Real wages grew by 1.8% in the last three months to March. This increase happened even as the employment and wage picture, when adjusted for inflation, has been quite contradictory. This change is a positive indicator that wage growth is beginning to moderate. While still above inflation, it provides families some relief from skyrocketing cost of living increases.
Danni Hewson, a financial analyst, commented on the broader implications of these trends:
“Ever since last year’s Budget shocked employers with a chunky increase to national insurance, businesses have been warning that increased labour costs would impact their ability to hire and retain staff.” – Danni Hewson
Hewson pointed out that the most recent data from the Office for National Statistics are confirming these dire projections. He warned that the reliability of that data could be at risk because of the lack of engagement.
The increasing cost of doing business is causing many employers to take a second look. Haine pointed out:
“Rising employment costs have already prompted some businesses to scale back pay rises and hiring this year, with the global uncertainty helping to cement that strategy.” – Alice Haine
So during these transitions, experts are urging families to make smart economic decisions. Haine suggested that maintaining an emergency fund and managing expenses could help families navigate periods of financial uncertainty:
“Building a robust emergency fund that can cover the regular bills during any periods without earned income, trimming expenditure where possible, paying down expensive debts and even signing up for income protection are sensible ways to ease financial worries.” – Alice Haine
Even with pressures from high cost of living and lagging wage growth, consumers are given a little something to feel good about. According to Hewson:
“This means pre-tax headline incomes are stretching further than they did 12 months ago, although households would be wise to adopt a cautious approach to their personal finances for now.” – Danni Hewson
Businesses are dealing with an immediate mismatch between higher costs and a weakening economic outlook, limiting their ability to raise wages. Employers, too, are trying to work their way through a particularly tough environment. Workers need to be more vigilant than ever and shift their financial planning as job security and wage stability continue to evolve.
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