The UK’s unemployment rate climbed to 5.1% in the three months to October, marking a noticeable increase from 4.3% last year. Young workers are facing the biggest impact, with those aged 18 to 24 seeing an 85,000 rise in unemployment, the largest jump since November 2022, according to the Office for National Statistics (ONS).
Businesses have expressed concerns that the government’s plan to replace the two-tier minimum wage with a single rate for all adults could discourage hiring young workers who have little to no experience. Many employers have also delayed recruitment decisions ahead of Chancellor Rachel Reeves’s Budget announcements on taxation and spending.
The effects of last year’s Budget are still being felt. National insurance increases made hiring more costly, prompting companies to adopt a cautious approach. Payroll data shows a decline of 149,000 employees, or 0.5%, compared with October last year, further signaling a slowing labor market.
ONS director Liz McKeown highlighted that these trends point to weakening employment conditions. However, some experts have raised concerns about the quality of ONS statistics. The Labour Force Survey sees low response rates, with only one in four businesses participating in the latest survey.
In response to the rising youth unemployment, the Department for Work and Pensions announced that former Health Secretary Alan Milburn will lead a review to explore the factors behind these trends. He has appointed a panel of health, business, and policy experts, called the “coalition of the concerned,” to examine the growing number of young people who are not in education, employment, or training (NEET).
