Labour market | 'Quiet but urgent crisis': jobless rate climbs amid mounting pressure on employers

Britain’s jobs market show fresh signs of strain as new data from the Office for National Statistics (ONS) revealed unemployment has risen to 5%, its highest level since the pandemic. The figures, covering the three months to September, point to slowing wage growth and persistent employer caution ahead of this month’s Autumn Budget.

Regular pay excluding bonuses grew 4.6% during the same period, down slightly from 4.7% the previous quarter. Vacancies, meanwhile, were broadly unchanged - falling by just 2,000 - suggesting businesses are holding off on recruitment decisions amid uncertainty over tax and spending plans.

Employers brace for slowdown but SMEs showing resilience

Michael Stull, Managing Director at ManpowerGroup UK, said the data “confirms what employers have been experiencing for months: cautious hiring, and a labour market under pressure.” He noted that unemployment has climbed to a level not seen since 2020, or before that, “the post-recession labour market of 2008–2012”.

According to Stull, many businesses are looking to AI and automation to cut costs and boost efficiency, though this risks widening the skills gap. “It’s going to take wages a while to regulate with the current state of the labour market,” he warned, adding that one in three firms now cite political uncertainty as a bigger influence on hiring than AI.