Employment in the UK is clearly in distress. The unemployment rate has climbed to 5.1%, marking a new high since January 2021. According to recent data, youth unemployment—ages 18 to 24—is at its highest point since the pandemic. From July to October 2025, another 85,000 people entered the newly unemployed category. As a result, industry leaders and government officials have both begun to recognize this growing trend of smart manufacturing. They are voicing serious, alarmed fears about its economy-destroying effects.
James Reed, chief executive of the recruitment company Reed Recruitment, called the state of affairs “the end of the beginning.” He called it all the key indicators of the labor market going “in the wrong direction.” These legal developments emerge amid rising unemployment and near the highest rates of unemployment seen during the height of the Covid-19 pandemic. The new numbers show a shocking net loss of 149,000 workers from companies’ payrolls. That is the same as a 0.5% decrease compared to last year.
Meerah Nakaayi, 22, from London, has experienced the outcome of these trends firsthand. Having been out of work since June, she described her experience over the last six months as “incredibly frustrating and demotivating.” Though Nakaayi had completed a two-year apprenticeship in policy and spent two years working in the sector, she had recently lost her job due to cuts. Her experience is emblematic of the uphill battle new graduates facing the same thing in today’s economy.
The new archetype While the current unemployment rate might sound like a statistical anomaly, it truly foreshadows a larger trend toward the fragility of economic stability. Helen Whately, the shadow work and pensions secretary very much attacked the government’s plans. She cautioned that their “growth-killing policies” might lead to millions of lost jobs, much more so now with the holiday season approaching quickly.
Compounding these challenges are mixed signals from the wage growth front. Average total wage growth, including bonuses, grew more slowly at 3.3% over the same period (Aug-Oct 2025). Earnings growth in the rest of private companies tapered off, from 4.2% to 3.9%. Public sector employees, in contrast, saw a boom, boosting their wages from 6.6% to 7.6% in that same timeframe. This disparity even prompts us to question the sustainability of such income growth across different sectors.
Richard Carter, the head of fixed interest research at Quilter Cheviot, underscored the tenuous nature of monetary policy. He noted that the Bank is “still walking a tightrope. They will need to choose their measures carefully to boost growth and not inflate the economy.
This is certainly something that economists are watching very closely. Yael Selfin, chief economist at KPMG UK, added that any future interest rate cuts will be dependent on whether wage pressures calm down. As of last month, the federal government finally committed to ending the two-tier minimum wage, establishing a single rate for all adults. This far-reaching provision directly addresses economic inequalities, but few believe it will substantially reverse adverse trends.
Liz McKeown is the ONS’s director of economic statistics. Below are some of her key observations regarding today’s labor market. She noted that the numbers illustrate a softening labor market. She called on legislators to consider ways that can create new job opportunities and help people like Nakaayi who are struggling to find work.
While the UK continues to contend with these issues, stakeholders from all sectors are keeping a close eye. James Reed questioned whether the labor market has reached its lowest point, stating, “I’m wondering whether they’ve hit the bottom or not.” His worries are on the minds of people everywhere. It’s why they’re scared without proactive measures and supportive policies to make sure what’s happening now doesn’t get worse in the coming months.