New month, similar picture. There isn’t much to be cheerful about in February’s employment market data, but if we’re to be positive about anything, the miniscule uptick in vacancies from January to February could be it. It remains to be seen if that’s a blip or an early indicator of a flattening or upward trend.
Mind the (talent) gap: The UK labour market in flux
The latest ONS data paints a familiar picture of a labour market in a state of transition. The UK employment rate edged up to 75.0% between October and December, a small increase from 74.7% in the previous quarter. Meanwhile, the unemployment rate remained steady at 4.4%, while economic inactivity, now at 21.5%, is lower than the previous quarter but has edged up from the 20.8% reported in our January update. Redundancies stayed unchanged at 3.8%, suggesting that while businesses are staying cautious, large-scale workforce cuts aren’t on the horizon just yet.
But the real story continues to be hiring – or the lack of it. While vacancies saw a slight month-on-month increase in January, potentially a sign of a slowing decline, the broader trend remains downward with open roles recorded between November 2024 and January 2025 falling by 9,000 compared to the previous quarter. This marks the 31st consecutive month of declining vacancies, yet again reinforcing the apparent trend of businesses keeping recruitment plans on ice or – perhaps a greater cause for concern – finding alternative ways to get work done.
Despite this, workers continue to see wage gains, with average weekly earnings (excluding bonuses) rising by 5.9% year-on-year, even before the impact of impending minimum wage uplifts. Private sector pay growth hit 6.2%, and with inflation at 3%, this means real-terms wage growth of 3.2% – offering (hopefully) at least a little relief from cost-of-living pressures.
Workforce & skills outlook
According to ManpowerGroup’s 2025 Talent Shortage Survey, 76% of UK employers are struggling to fill roles due to a lack of skilled talent, a slight improvement from 80% in 2024 but still highlighting significant skills shortages. Meanwhile, global workforce shifts will continue, with lower-income countries expected to hold 59% of the world’s working-age population by 2050. India and Sub-Saharan Africa are set to supply nearly two-thirds of new workforce entrants over the next few decades.
The future of jobs & automation
It looks like by 2030, the global job market will be transformed from what we’re seeing today. While 170 million new jobs are expected to emerge, automation and shifting labour demands are predicted to displace 92 million roles. The evolving workforce will see 1.2 billion young people entering employment in emerging economies, but with only 420 million additional jobs projected, bridging the gap between skills and opportunities will be crucial.
This new reality underscores more than ever the growing need for continuous upskilling and reskilling as a key business priority. For business and talent leaders, adapting to this shift will be essential. At our upcoming conference, The Journey to a Skills-Based Organisation, we’ll be sharing insights from our inaugural report, The Future of Talent: The Definitive Guide to Becoming a Skills-Based Organisation, where you can find out everything you need to know about the shift to skills-based hiring, and more importantly, the practicalities of applying it and measuring success.
This update is based on the latest data from the Office for National Statistics (ONS), published on 18 February 2025. As ONS figures are subject to ongoing revision, some data points may differ slightly from our previous market updates, based on month-on-month vs quarterly comparisons. For the most up-to-date figures, please refer to the ONS website.
