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

“Today’s figures suggest the UK’s labour market is in a challenging transition. Data shows more employers are holding back from hiring, the pace of pay growth is easing but the number of people beginning to look for work is on the rise.

“Unemployment is now at its highest level for four years at 4.7%, while the number of vacancies has fallen by 56,000 on the quarter to 727,000 in April to June 2025. There are now 2.3 people seeking work per vacancy available in the most challenging labour market in recent years.

“Although these figures may reflect a reduction in business confidence to recruit as employment costs rise, it also appears more people are moving out of economic inactivity to begin looking for work. Economic inactivity has fallen to 21%, the lowest percentage since the onset of the pandemic in early 2020, and down 375,000 people on the year.

“As more people are now looking for a job, there is a significant risk they will struggle to access secure and well-paid work. Data shows nominal wage growth slowing to 5%, and despite the longest period of sustained wage increases in over 20 years, workers continue to feel the impact of nearly two decades of stagnating pay packets. Wages are just £26 a week higher in real terms than they were at the start of the global financial crisis in August 2008. Years of stagnating wages and the cost of living crisis mean that six in ten workers (60%) say they have very little or nothing left over from their pay at the end of the month.

“Today’s data underscores the importance of Government committing the investment and funding required to support more people into secure and well paid work. It’s vital that alongside an extra £1 billion for additional employment support programmes, the Government sticks to its guns on the Employment Rights Bill and puts the creation of high quality jobs at the heart of its Industrial Strategy.”

Please note: Data is from Shifting Challenges (released 11 July 2025) – using data from a Survation survey of 3,796 workers aged 16-64 living in the UK. The fieldwork took place online between 2 and 12 May 2025).