The UK unemployment rate rose to 5.1% in the three months to October, up from 5% in the previous quarter, according to official figures. This marks the highest number of people out of work since January 2021, just below the peak reached during the Covid-19 pandemic.
The Office for National Statistics (ONS) said the figures point to a subdued and weakening labour market, with employers becoming more cautious about hiring. Payroll employment fell by 149,000 people, a 0.5% drop compared to the same period last year, underscoring the slowdown in recruitment activity.
Average pay growth, excluding bonuses, stood at 4.6% between August and October. However, the picture differed sharply between sectors. Wage growth in private companies slowed from 4.2% to 3.9%, while pay growth for public-sector workers accelerated from 6.6% to 7.6%. Despite this divergence, overall wage growth continues to outpace inflation.
Young people have been particularly affected by the deteriorating jobs market. Unemployment among 18- to 24-year-olds rose by 85,000 over the three months, the most significant increase since November 2022. The ONS noted that falling payroll numbers disproportionately impacted younger workers.
In response, the government has announced an investigation into youth unemployment and economic inactivity. It has also pledged £1.5bn to fund 50,000 apprenticeships and create 350,000 new workplace opportunities for young people. Ministers say this investment will help provide vital experience and improve long-term job prospects.
However, critics argue that recent policy decisions could deter businesses from hiring, particularly inexperienced workers, at a time when the labour market is already under strain.
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