Young workers hit hardest as UK unemployment rate rises to 5.1%
The UK unemployment rose to 5. In the three months to October, the percentage fell by 1%, with younger employees particularly affected. The unemployment rate in this year was at 4. 4 percent this year. Official results from the Office of National Statistics (ONS) show that an increasing number of people out of work is leading to a trend. The number of unemployed 18-24 year olds in the three months to October 2025 increased by 85,000, the largest increase since November 2022. According to the ONS, the figures represented a subdued labour market
that was particularly relevant to young people.
Youth unemployment
The statistics, which cover the time leading up to the Budget, reflect many employers' decision to slow down or freeze recruiting until they knew the Chancellor Rachel Reeves' taxation and budget proposals. Many businesses have also reported that they are still dealing with the effects of last year's Budget, as national insurance rises made recruiting more costly. Employees on company payrolls dropped by 149,000, or 0. 2 percent, or by 0. In October, the figure was down 5% compared to the previous year. According to Liz McKeown, ONS' head of economic statistics, the results point to "a weaker labor market. The decline in payroll figures and the rise in unemployment were also affecting young people, according to Ms McKeown. The government has confirmed that it would launch an inquiry into youth unemployment and inactivity.
'Incredibly frustrating and demotivating'
Meerah Nakaayi is 22 and from London. She completed a two-year apprenticeship in policy and then worked in the industry for two years, but has been out of work since June.
Meerah said.The last six months have been extremely frustrating and demotivating,
my last interview report revealed. for a niche policy area. I think that just shows how competitive it really is out there.They received 290 applications for a policy analyst position,
Reed Recruitment's CEO James Reed told BBC Radio 4's Today show thatThe economics of recruiting at entry level are becoming less and less appealing to employers,
punishedthe economics involved in recruiting at the entry level is getting less and more attractive to employers. The government has agreed to scrap the two-tier minimum wage and replace it with a new one for all adults. However, many businesses have said that this will make them less able to recruit young employees with no or no expertise. The hospitality industry is
It's young people who have suffered the most," the government's latest apprenticeship schemes didn't include apprenticeships.by government policies, according to Kris Gumbrell, the chief executive of Brewhouse and Kitchen chain of pubs. Mr Gumbrell revealed that he had posted a job advert for a front-of-house position that attracted 200 applicants in a few hours.
Wage growth
The UK unemployment rate has hit its highest rate since January 2021, just below the peak rate seen during the Covid-19 pandemic. For those in work, wages are still rising faster than inflation, but wage growth is slowing at companies. Average wage growth was 4. Between August and October 2025, the unemployment rate was 6 percent, excluding bonuses. However, the situation for public- and private-sector employees is different, since compensation increases for those employed by the government went into place earlier this year than in 2024. Private companies' earnings growth slowed from 4. 2% to 3. From 6. 9% but the public sector workers' rate has risen. 6% to 7. 6%, compared with the prior three-month period.
Interest rate decision
On Thursday, the Bank of England will determine whether to cut interest rates or hold them at 4%. According to Yael Selfin, chief economist at KPMG UK, a rate cut is now likely.
she said. However, inflation in the UK is now almost double the Bank's target of 2%. As the cost of borrowing is lower, lower interest rates could fuel inflation. The Bank isThe most recent reports from the job market should be sufficient to support a rate cut later this week,
still walking a tightrope,according to Richard Carter, head of fixed interest research at Quilter Cheviot, because it wants to encourage expansion while also keeping inflation rates low. On Wednesday, the ONS is forecast to announce the latest inflation figures.
Mr Carter said,Should inflation come in lower than expected on Monday,
underline the magnitude of the challenge we've inherited.a rate cut may have crossed off everyone's holiday list. Secretary of State for Work and PensiONS, Pat McFadden, said the findings
growth-killing policiesThat is why we are investing £1. Young people will be given 50,000 apprenticeships and 350,000 new job opportunities, giving them real insight and a foot in the door. Helen Whately, shadow work and pensions secretary, accused the government of enforcing
Thousands of families will be struggling through the holiday season and without a steady income going into the New Year, for the first fifteen months in a row. "ONS results are used to develop government policy, which affects milliONS of people, and the Bank of England also uses them to make critical financial decisiONS, such as setting interest rates. However, a ONS review was highly critical of the organization, bringing into question the accuracy of the agency's economic results. The ONS has struggled, as have several research organizatiONS, with tight budgets and the challenge of encouraging people to fill in the questionnaires that are needed for their records. The response rate for the Labour Force Survey is consistently low, particularly with employment and wage estimates. Only one out of four companies responded to this employment survey.that would result in job losses in the run-up to Christmas.
