149,000 Payroll Jobs Evaporate Yearly

Unemployment hit 5.1% in the three months to October 2025, up from 4.3% a year earlier. Official figures show payroll employment fell 149,000, or 0.5%, year-on-year. Businesses paused hiring ahead of the Budget, citing national insurance hikes from the prior year.

Young workers bear the brunt. Unemployment among 18-24-year-olds rose 85,000, the sharpest increase since 2022. Competition intensifies: one policy role drew 290 applicants.

Wage growth splits by sector. Private sector pay rose 3.9%, down from 4.2%. Public sector earnings jumped to 7.6% from 6.6%.

Data Reliability Crumbles

ONS admits a “subdued labour market.” Yet response rates undermine the numbers: only one in four businesses replied to the employment survey. A recent review slammed ONS data quality amid budget cuts and survey fatigue.

Government pledges £1.5 billion for 50,000 apprenticeships and 350,000 youth opportunities. Pat McFadden calls it tackling an “inherited challenge.” Businesses counter that minimum wage hikes deter entry-level hires.

Hiring economics shift. Reed Recruitment’s CEO notes all labour indicators trend downward. Employers weigh costs against uncertain returns on inexperienced workers.

Bank of England eyes rate cuts as payrolls stagnate. Inflation lingers near 4%, double the 2% target. Lower rates risk stoking prices while growth falters.

This pattern echoes pre-2025 trends. Unemployment hovered below 5% for years, yet inactivity swelled via disability claims. Governments alternate blame but deliver matching outcomes: 5%+ rates recur.

Private sector restraint stems from policy signals. National insurance rises added £25 billion in employer costs last year. Firms respond by shrinking headcounts, not expanding.

Youth exclusion deepens. Apprenticeships promise entry, but 290 applicants per niche role signal oversupply. Structural barriers lock out the inexperienced as public sector absorbs talent at premium rates.

Institutions prioritize short-term fixes. ONS surveys limp on low participation. Policymakers lean on flawed data for Budgets and rates.

Payrolls contracted despite wage growth outpacing inflation at 4.6%. Real earnings rise masks job scarcity. Families face Christmas without steady income, as shadow ministers note fourteen months of climbs.

Cross-party inheritance rings hollow. Labour’s NI hikes mirror Conservative fiscal squeezes. Both elevate public pay while private hiring stalls.

The labour market reveals core dysfunction. Governments promise jobs, deliver constraints. Businesses hire less, youth idle more, data falters. Britain’s work force contracts as output stagnates.

This exposes the cycle: policy uncertainty breeds caution, weak data hides scale, interventions target symptoms. Unemployment at 5.1% signals no reversal. Decline embeds when hiring freezes become norm across administrations.