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

“As the Government finalises its Spending Review, today’s figures paint a picture of a weakening labour market that could undermine their ambition of boosting employment during the remainder of the Parliament.

“Regular nominal pay is still rising above inflation but is on a downward trajectory. There is good news for workers in traditionally low paid sectors such as wholesale and retail who have seen wages rises by 7.7%, in part fuelled by the National Living Wage increase in April. But overall, the growth in the real value of pay has fallen to its lowest level for 18 months at 1.4%.

“In recent years, pay increases have masked the underlying challenges facing the UK labour market. Early estimates for the number of payrolled employees suggest these continue to decline into May. And the unemployment rate is now at 4.6%, the highest level for nearly four years. This may be driven by some people coming out of economic inactivity and starting to look for jobs. But with a simultaneous decline in payrolled employment and a reduction in vacancies, this could prove to be a challenging jobs market to find work in.

“Vacancies continued to decline, down 63,000 (7.9%) on the quarter and down 150,000 (16.9%) on the year. There are now 2.2 unemployed people for each available job, with jobseekers navigating the most competitive jobs market since February-April 2021 – when the economy was recovering from the impact of the Covid-19 pandemic.

“Today’s data underscores the importance of Government committing the investment and funding required to support more people into the labour market in the Spending Review. It’s vital that alongside an extra £1 billion for additional employment support programmes, the Government reverses plans to cut nearly £5 billion of welfare spending. These cuts stand to make it much more difficult for those with long-term health conditions to access sustainable employment in the future.”