Unemployment in the UK has reached its highest level in four years, with new data showing young people are bearing the brunt of a toughening labour market.
The latest official figures reveal a steep rise in redundancies and a further drop in the employment rate, raising alarm among employer groups and HR experts who are calling on the government to take immediate steps to support young workers and ease pressure on businesses.
The Office for National Statistics reported that the UK jobless rate climbed to 5.1 percent in the three months to October 2025, the highest since early 2021. The number of people on company payrolls fell by 149,000 over the past year and by 24,000 between September and October. At the same time, the employment rate dipped to 74.9 percent for working-age adults, and wage growth stagnated as the cost of living continued to bite.
Redundancies have soared to their highest level since the early months of the pandemic, while the number of vacancies has edged down, reflecting what analysts are calling a clear downturn in the UK’s job market. The pressures have been compounded by rising employment costs for businesses and a recent increase in the minimum wage.
Youth unemployment rises as calls for support intensify
The impact has been felt most acutely among younger people. James Cockett, a senior labour market economist at HR body the Chartered Institute of Personnel and Development (CIPD), blamed last month’s Budget.
“Unemployment has risen again this month, and the data shows it’s younger people who are being hardest hit,” he said. “There was little in the Budget to encourage employers to invest in young people. Instead, there was a significant uplift to the youth rates, set to come into effect from April next year, further raising the costs of employing young people.
“It’s clear the Government needs to take stronger action to support young people in securing valuable training and employment opportunities. While it was positive to see the government announce funding to support apprenticeship starts for under-25s in smaller businesses in the Budget, it needs to go further. It can do this by introducing an Apprenticeship Guarantee for 16 to 24-year-olds, which is supported by many employers.
“Looking ahead to 2026, with redundancies soaring to their highest rate since early 2021 and real wage growth stagnating, it’s clear the Government needs to develop a meaningful plan to boost growth. This means working in partnership with employers to boost the investment in skills and technology adoption that’s needed across the economy to improve productivity and living standards.”
Redundancies, stalled hiring hit jobseekers and employers
Data provided by Employment Hero, a workforce platform, show that the slowdown is being felt in real time by employers around the country. Kevin Fitzgerald, UK managing director at Employment Hero, noted that the ONS data matched what his firm was seeing in its own analytics, with employment growth slowing from 7.6 percent in November 2024 to just 2.0 percent in November 2025.
He described the current environment for jobseekers as particularly tough, saying that, “Sadly, the small increase in vacancy numbers recorded in October hasn’t been maintained. The job remains incredibly tough, and many jobseekers feel stuck – our recent survey found that 42 percent of UK workers searched for a new job in 2025. The lack of opportunities, combined with the continued rise in inflation, is putting pressure on employers who are also contending with rising costs, such as last month’s minimum wage increase.”
He added that smaller employers were especially vulnerable to the economic pressures facing the labour market, and that creating the right conditions for further hiring would be key to unlocking the country’s job potential in the months ahead.
Government urged to partner with employers
Employer groups are now urging ministers to work in partnership with businesses and unions to avoid making things worse. Cockett, from the CIPD, stressed that further consultation and compromise are needed on key employment measures, including those in the Employment Rights Bill, to ensure they do not create additional barriers to hiring
“The Government should also continue to commit to an ongoing tripartite process on key measures in the Employment Rights Bill still to be decided in secondary legislation, to ensure they don’t further hold back hiring,” he said.
“Some measures proposed in the bill could act as a weight on employers who have genuine concerns on how these changes will affect their business. While there have been some positive developments around unfair dismissal there’s still a need for continued consultation, and compromise, to ensure the bill doesn’t reduce employment opportunities.”
With more young people out of work and redundancies on the rise, HR leaders are being urged to invest in training, support retention and work closely with partners across the sector to help navigate a difficult period for the UK workforce.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
