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May's Market Insights

11 Jun, 202510

Labour Market OverviewThe latest ONS Labour market overview show that:UK unemployment rate i...

By Mark Taylor

In this blog:: Industry Insights

Labour Market Overview

The latest ONS Labour market overview show that:

UK unemployment rate increased from the previous quarter to 4.6%, with 1.640 million people unemployed
Unemployment amongst young people remains high, particularly the youngest age group (aged 16-17 = 28.4%/ aged 18-24 = 12.7%)
The employment rate remains largely unchanged at 75.1%, 34 million people in employment
The UK economic inactivity rate remained largely unchanged at 21.3% and 303,000 lower than 12 months ago
A total of 9.187 million people are economically inactive, which is lower than last year but 557,000 higher than pre-pandemic levels
Vacancies fell to 736,000, the 35^th consecutive quarterly decline and 59,000 below pre-covid levels. This means there were 2.2 unemployed people per vacancy in February 2025 to April 2025, up from the previous quarter
Payrolled employees for May 2025 decreased by 109,000 to 30.2 million and decreased by 274,000 over the year, 1.17 million higher than pre-pandemic levels.
Annual growth in regular pay without bonus was 5.2% and with bonus was 5.3%. Adjusted for inflation, annual growth in regular pay was 1.4% and total pay was 1.5%
Claimant count increased on the month and on the year to 1.735 million. This is the measure of those receiving benefit principally due to being unemployed
Redundancies were 3.5 per thousand employees, slightly less than last quarter and similar to 12 months ago
47,000 working days were lost because of labour disputes in April 2025, slightly down on the previous month

The Institute for Employment Studies has published it's latest analysis of the labour market. Since the start of the pandemic, the UK workforce has contracted by 1.3 million people, largely due to a sustained rise in economic inactivity. The leading cause of inactivity is ill-health, with many individuals unable to work due to physical or mental health conditions. People with disabilities continue to face persistent and systemic barriers to fully participating in the labour market, highlighting the urgent need for more inclusive employment practices.

Data from the Labour Force Survey show:

33.7 million working days lost in 2023/24 due to work-related ill health or non-fatal injuries
The leading causes were stress, depression or anxiety (16.4 million days) and musculoskeletal disorders (7.8 million days)
The average number of days lost per affected worker was 15.5, with an average of 1.25 days lost per worker, comparable to pre-pandemic levels

The Government has announced a major skills investment package to support young people and reduce reliance on migrant labour. Backed by a record £3 billion apprenticeship budget, the measures are designed to boost domestic skills in key sectors and include:

30,000 additional apprenticeship starts across this Parliament
45,000 extra training places, funded by an increase to the Immigration Skills Charge
Refocusing apprenticeship funding away from Level 7 programmes to lower levels from January 2026
Launch of 13 new Level 2 construction courses
£14 million of adult skills funding for construction devolved to local mayors
£136 million allocated to Skills Bootcamps in 2025/26
£100 million over four years to expand construction bootcamps
10 technical excellence colleges specialising in construction skills opening in September 2025

Thousands of young people across England will receive targeted support into work, under a new £45 million scheme launched by the Work and Pensions Secretary. Liverpool City Region is one of eight areas across England set to receive a £5 million investment into work with 18- to 21-year-olds most at risk of falling out of education or employment.

As part of round 21 of the National Minimum Wage naming scheme, 518 employers have been publicly named for underpaying nearly 60,000 workers a total of £7.4 million. These underpayments relate to investigations concluded between 2015 and 2022. Offending businesses also faced financial penalties of up to 200% of their underpayment.

In a letter to the joint Chief Executives, Education Secretary Bridget Phillipson confirmed that Skills England is now fully operational. Its strategic priorities are:

Identifying future skills needs
Simplifying access to training
Co-developing sector-specific solutions with industry

Skills England’s review across 10 key growth sectors highlighted several challenges including apprenticeship standards being slow to adapt to change, delivery frameworks can be too rigid and SMEs face significant barriers accessing apprenticeship schemes.

Research from King’s College London found:

No widespread return to office trend in the UK
RTO (Return to Office) mandates face growing resistance, especially among women and parents
Mandates risk creating a two-tier workforce, potentially harming gender diversity, wellbeing, and talent retention

The TUC has published a report on barriers faced by disabled workers in accessing reasonable adjustments. Findings include:

34% did not receive the adjustments they needed
34% reported disability-related leave was misclassified as sick leave
28% experienced workplace bullying, discrimination or harassment

A new Institute for Public Policy Research (IPPR) report warns of the growing risks of workplace surveillance driven by digital technologies. It calls for legal reforms to protect workers' rights and ensure that surveillance technologies are implemented only after consultation and negotiation with affected workers.

Investors in People have published a report on why many workers avoid management roles:

52% of UK workers do not see management as an attractive career
Fewer than 1 in 5 non-managers aspire to leadership
Both managers and staff agree that clearer career paths, professional development, and better rewards would make management more appealing

The &Culture report How to Support Returning Parents highlights that the transition back to work after maternity leave is a critical point in many women’s careers. Findings include:

70% of mothers experienced anxiety or stress when returning
Over 50% were unhappy with how they were treated upon return
More than half left their jobs within 12 months of returning

The Resolution Foundation’s spotlight report analyses the Government’s Pathways to Work Green Paper. It warns that proposed welfare reforms will result in:

A net spending cut of £4.8 billion by 2029–30
3.2 million families losing financial support
250,000 people falling into poverty
700,000 families pushed further below the poverty line

Although the package includes £1.9 billion in employment support between 2026–27 and 2029–30, over half of this funding will not be delivered until the final year. The government aims to offset the negative effects of benefit reductions through increased employment.

The Government has published the accessible version of its Restoring Control Over Immigration White Paper. The paper sets out a comprehensive plan to create a more controlled and managed immigration system, with a key objective to reduce net migration.

A House of Commons Library briefing summarises eight policy proposals in the White Paper that aim to reduce net migration, including:

Reducing the list of eligible occupations under the Skilled Worker visa route
Ending international recruitment of social care workers
Shortening the Graduate visa period
Introducing stricter English language requirements

The Migration Observatory highlights that around half of temporary visa holders at the end of 2024 had a route to settlement. However, it is unclear whether these routes will be affected and whether existing residents will be included.

The Home Office has updated its guidance on digital immigration status. The transition to an online immigration system is underway, replacing physical documents with eVisas - digital records of immigration status. Documents already being phased out include:

Biometric Residence Permits (BRPs)
Biometric Residence Cards (BRCs)
Passport endorsements (e.g. indefinite leave to enter stamps)
Visa vignette stickers in passports

Since 2018, millions of people have received eVisas, particularly via the EU Settlement Scheme.

The Office for National Statistics (ONS) reports a sharp fall in long-term net migration, estimated at 431,000 in the year ending December 2024 – a 50% reduction from 860,000 in the previous year.

This decrease is attributed to fewer arrivals on work and study-related visas, especially among non-EU nationals and a sharp rise in emigration, including international students leaving the UK as travel restrictions eased.

The Migration Advisory Committee (MAC) has completed a targeted review of immigration use in the IT and engineering sectors. In a letter to the Home Secretary, the MAC concluded that sector use of the immigration system is proportionate and within existing rules and no significant problems were identified. No formal recommendations were made, and the MAC advised against system-wide changes based on such a limited review.

The Seasonal Worker Scheme Taskforce (SWSTF) has published its May 2025 progress update, highlighting key priorities delivered between January and April: