The Work Foundation at Lancaster University responded to the labour market figures for March 2025 released by the Office for National Statistics. Ben Harrison, Director of the Work Foundation at Lancaster University commented:

“In the week that Government launched its Green Paper to create ‘Pathways to Work’ to boost employment levels in the UK, today’s data reveals that while the labour market may be stabilising, a number of stubborn challenges remain.

“In positive news, the labour market continues to produce strong nominal pay growth at 5.9% as it continues to outpace inflation. Nominal pay growth has now been above 4% for three years, the strongest run of pay growth since records began in 2001. This is providing a rare period of real wage growth for workers, who have faced stagnating living standards since 2008.

“Nevertheless, ahead of today’s Bank of England interest rate decision, weak economic growth and sustained pay increases may give policymakers pause for thought before any further interest rate reductions.

“Although vacancies have decreased steadily since 2022, it appears they are levelling off at around 816,000 and are in line with the pre-pandemic levels of early 2020. Unemployment is at 4.4%, up on the year, and on the quarter – there are now nearly two jobseekers for every vacancy. There is a particularly concerning rise in youth unemployment, with 106,000 more people aged 18-24 unemployed than a year ago.

“The Government’s Youth Guarantee has the potential to support more young people into the labour market but as it stands half of young people will miss out as it will only be available to 18–21-year-olds. And things may be about to get more challenging for some young people who are out of work due to ill health, with Government having this week outlined its intention to remove access to the Universal Credit health top-up for those under the age of 22.”

Notes: 36-month run of above 4% pay growth is based on Average Weekly Earnings (nominal) - Regular Pay (Great Britain, seasonally adjusted) three-month average.