UK Youth Unemployment Hits Four-Year High Amid Slowing Wage Growth
The unemployment rate in the UK for the three months leading to October 2025 reached 5.1%, marking a four-year high and an increase of 0.8 percentage points compared to the previous year. Youth unemployment notably rose, with 546,000 individuals aged 18 to 24 unemployed in October — the highest figure since 2015 and an increase of 85,000 on the previous quarter.
The employment rate for the working-age population declined slightly by 0.3 percentage points to 74.9%, while inactivity decreased by 0.7 percentage points to 21%. Although health-related inactivity remains significant, it is not the main driver behind the downturn. Data from the ONS alternative payrolled jobs indicator shows a year-on-year decline in payrolled jobs from March 2025, with the November flash estimate at -0.6%.
Annual regular pay growth slowed to 4.6%, down from 5.9% at the end of 2024. Real-time figures indicate a decline in pay growth to 2.7% in October, compared with 3.7% in September. This easing in wage growth and a softer labour market could reduce inflationary pressures and potentially allow the Bank of England to consider interest rate cuts, possibly around the Christmas period.
Labour party plans to equalise the minimum wage for younger workers with the adult rate, with another increase scheduled for April 2026. However, some commentators, including the Resolution Foundation, question whether this is advisable given the current economic context. Labour’s broader policy framework, including the Get Britain Working white paper, emphasises youth employment as a key priority.
