UK Youth Unemployment Hits Highest Level Since 2015 Amid Slowing Wage Growth
The UK unemployment rate reached 5.1% for the three months ending October 2025, marking a four-year high and an increase of 0.8 percentage points compared to the previous year. Employment fell slightly to 74.9%, down 0.3 percentage points quarter-on-quarter, while the inactivity rate decreased to 21%, down 0.7 points. Although health-related inactivity remains significant, it is not the primary cause of the recent downturn.
Youth unemployment notably worsened, with 546,000 people aged 18–24 out of work—the highest figure since 2015—and an increase of 85,000 from the previous quarter. Real-time data on payrolled jobs indicated annual growth turned negative in March 2025, with a November flash estimate showing a 0.6% year-on-year decline, the fastest drop since the pandemic.
Wage growth has also softened, with regular pay rising 4.6% in the Office for National Statistics' main series, down from 5.9% in late 2024. Early real-time data showed wage growth slowing to 2.7% in October, down from 3.7% in September. This easing in wage growth could reassure the Bank of England and support anticipated interest rate cuts.
In the policy sphere, Labour has proposed equalising the minimum wage for younger workers with the adult rate, with another increase planned for April. However, critics, including the Resolution Foundation, have questioned the timing of this move given the current economic environment. Additionally, Chancellor Reeves's late November budget was described as extended and chaotic, potentially influencing employer sentiment and hiring prospects.
