The Resolution Foundation, a leading British think tank, said the British labor market is weakening "on multiple fronts," pointing to a fall of 64,000 in payrolled jobs over the past two months, a drop in short-term private-sector pay growth to 2.7 percent, and unemployment rising to 5 percent -- its highest level since 2016.
LONDON, Nov. 12 (Xinhua) -- Britain's unemployment rate edged up to its highest level since the pandemic in the third quarter of 2025, a sign of a labor market losing its fizz as firms curb investment and scale back hiring plans.
Analysts have warned that the forthcoming Budget, due in late November, will need to deliver swift support to ease the strain on employers.
SLUGGISH LABOR MARKET
Britain's jobless rate for those aged 16 and over is estimated at 5 percent between July and September, up from both the previous quarter and the same quarter a year earlier, according to figures released on Tuesday by the Office for National Statistics (ONS).
Over the same period, the number of payrolled employees fell by 26,000 quarter-on-quarter, while the estimated number of job vacancies remained broadly unchanged.
"Taken together, these figures point to a weakening labor market," said Liz McKeown, director of economic statistics at the ONS.
Echoing her view, Naomi Clayton, chief executive at the Institute for Employment Studies, said, "Outside the pandemic, the unemployment-to-vacancy ratio is the highest in 10 years."
The Resolution Foundation, a leading British think tank, said the British labor market is weakening "on multiple fronts," pointing to a fall of 64,000 in payrolled jobs over the past two months, a drop in short-term private-sector pay growth to 2.7 percent, and unemployment rising to 5 percent -- its highest level since 2016.
The foundation also noted the continuous weakening of income growth.
"Looking at the short-term annualised three-month change, private sector pay growth in September was significantly below the rate of inflation," it said. "After adjusting for inflation, the overall level of weekly pay has grown by just 3 pounds (3.94 U.S. dollars) over the past 12 months."
FIRMS URGE SUPPORT
Calling the sharp decline in payrolled employees a wake-up call for the government, Alex Hall-Chen, principal policy advisor for employment at the Institute of Directors (IoD), said the drop reflects the combined impact of higher employer National Insurance contributions and the looming Employment Rights Bill -- measures that have made hiring a costlier and riskier bet for businesses.
Citing an IoD survey of 500 business leaders in October, she said the Employment Rights Bill, designed to bolster worker protections, introduces stricter rules on dismissals, benefits and workplace flexibility, is found to be "the top employment and workplace regulation blocking organisations' ability to grow."
"The message from business is clear: the Bill is deterring businesses from hiring staff," she said.
Ahead of the Budget, the British government faces the delicate task of reconciling its pro-growth promises with a fiscal hole estimated at some 30 billion pounds (39.42 billion dollars).
"With job vacancies static, high levels of economic inactivity and 5 billion pounds (6.57 billion dollars) of extra employment legislation around the corner, the Budget must give firms a reason to be optimistic," said Jane Gratton, deputy director of public policy at the British Chambers of Commerce.
She added that businesses' chief concern is that the Budget should avoid heaping further tax burdens on them.
Warning that the labor-market slump may prove more than a passing wobble driven by April's hefty tax rises on firms, Nye Cominetti, principal economist at the Resolution Foundation, echoed Gratton's call for the Budget to shield workers from further pain while refraining from piling new costs onto employers.
Similarly, Neil Carberry, chief executive of the Recruitment and Employment Confederation, said, "With vacancy numbers now stabilising after their long decline, there is an opportunity to make progress if the Budget backs businesses rather than punishing them."
He noted that the government's commitment to supporting business needs to extend to a break from a rising tide of business taxes and a much more practical approach to the Employment Rights Bill.■
