If someone took a quick look at the UK labour market, they could be forgiven for imagining workers would be enjoying the benefits of a period of unprecedented wage growth. Real terms pay has increased for 23 months in a row, with those in low paid employment having received a 6.7% increase in the National Living Wage from April 2025.

But looking more closely reveals a significantly more challenging picture. The reality is that a legacy of more than a decade of stagnating pay, together with the recent cost of living crisis that saw inflation peak at 11.1%, has left many across the country significantly worse off, and continuing to struggle to make ends meet.

This article explores the kinds of financial insecurity faced by many UK workers in 2025. It does so by analysing the latest ONS labour market statistics and a representative Survation survey of 3,796 workers aged 16-64 living in the UK (May 2025).

The long shadow of the financial crisis and increased cost of living

Following the Great Financial Crisis in 2008, millions of UK workers suffered an unprecedented decade of squeezed pay. In the early 2020s, workers then faced the worst cost of living squeeze in a generation. Inflation peaked at 11.1% in 2022 but the legacy of higher energy, food and housing costs continue to bite.

Data from the Office for National Statistics (ONS) suggests we are living through the strongest period of sustained wage growth for over 20 years – average nominal wages have increased by more than 5% for 34 consecutive months.

But despite this growth, survey data suggests many workers continue to struggle with the cost of living. One in six workers surveyed (17%) report that they struggle to pay or cannot pay their household bills each month. And four in ten workers (43%) state they have little or nothing left after paying their bills – putting the idea of saving or going on holiday out of reach for millions of workers.

For a government promising to raise living standards, it isn’t necessarily sufficient for them to deliver on a series of policy promises. In the end, the UK Government will be judged on whether working people actually feel better off. But our survey paints a concerning picture, with only half of workers (48%) agreeing that wage increases are keeping up with the cost of living. A quarter of workers (26%) do not expect an above inflation pay rise in the next 12 months, whilst 43% expecting real terms pay increases.

And despite delivering an above inflation pay increase to over three million low paid workers in April 2025, low-income workers are still feeling the pressure. Just one month later, our survey shows only 42% of those earning less than £25,000 expect pay to keep up with the cost of living, compared to 73% of higher paid workers (earning £60,000 or more).

Workers continuing to bear the brunt of a sluggish economy, and are looking for other sources of income

These financial pressures appear to be pushing more people to work extra hours or find additional sources of income. ONS figures show that a record 1.35 million UK people have second jobs, with a marked increase of 121,000 (10%) on the year driven primarily by male workers. For a minority of workers, second jobs are optional extras to monetise a hobby or an interest but our previous research indicates economic necessity is the most common motivation.

Ordinarily, you would not expect such a growth in second jobs at a time of record wage growth. While casual and gig economy work through apps has become more readily available in recent years, the data points to the reality that some workers are not getting enough income from their main job, and are looking to take on additional jobs. This rise follows an international trend and there have been similar reports about the increase of people working multiple jobs in the United States.

Generational differences appear

Whilst many workers continue to struggle with financial pressures, older and younger workers are facing acute challenges.

Just three in ten older workers aged 55-64 (29%) believe their employer supports their financial wellbeing compared to 44% of all employees. Older workers are also less optimistic about getting pay increase above inflation this year. Only a quarter (24%) of 55-64 year olds believe they will get an above inflation pay rise this year, with 16–24 year olds (50%) and 25-34 years old (62%) twice as likely to think they’ll get more wages in their pockets.

On the other hand, younger workers are particularly worried about their job security. One in eight people aged 16-24 are not in education, employment or training, and our survey reveals many workers are worried about joining this group. Nearly half of 16-24 year olds are concerned about losing their jobs (48%), compared to 33% of all workers.

What can Government and employers do to support workers in 2025 and beyond?

In some respects, these findings underline the fact that the Government is right to prioritise driving up living standards in this Parliament. The focus on driving growth in the economy is important, likewise the measures in the Employment Rights Bill have the potential to help improve access to more secure and flexible employment opportunities for more workers.

But they also suggest that it’s going to take sustained action and an extended period of time before people really feel like they’re better off.

Therefore, it’s vital that the Government doesn’t get complacent and imagine the steps already taken will be sufficient. It should be ready to extend existing measures, such as the new Crisis and Resilience Fund, in the 2025 Budget. And more broadly, we need to see a renewed focus on reducing poverty alongside tackling the root causes of many day-to-day expenses – such as a broken housing market, water and energy provision and childcare services – each of which could help lower peoples bills in the future.

Employers have a significant role to play here too. The Work Foundation undertook research into how the cost of living crisis was shaping the way employers approach financial wellbeing at work in 2023 and 2024. We found that two thirds of employers (62%) agreed they had a major responsibility to support staff through the cost of living crisis, but that a clear gap between ambition and action remained, with only 38% reporting that they have introduced new support for workers by mid-2024.

To bridge this gap, it’s important that employers take an ‘engagement first’ approach to financial wellbeing. Working with employees and trade unions, they should prioritise at or above inflation pay increases – especially for lower earners – and review employment contracts to strengthen job security and provide guaranteed working hours for all workers in the future.

To hear more about this research, please join our online event on 17 July 2025 between 13.00-14.00: Work Matters 2025: Labour market a crossroads?

To read more of our research on the costing of living crisis, please see:

• Shifting Priorities? Employer responsibility in the third year of the cost of living crisis (May 2024)
• Shifting Sands: Employer responsibility during the cost of living crisis (March 2023)

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