Young Workers Suffer as UK Unemployment Rises to 5.1%
The UK unemployment rate rose to 5.1% in the three months up to October, according to official figures. Young people were the most affected.
At the same time last year, unemployment was 4.3%. This shows that more people are now out of work, based on data from the Office for National Statistics (ONS).
The number of unemployed people aged 18 to 24 increased by 85,000 in the three months to October. This is the biggest rise since November 2022.
Many businesses say the government’s plan to remove the two-tier minimum wage and introduce one rate for all adults could reduce job opportunities for young people with little or no experience.
Youth unemployment concerns
The ONS data was collected before the Budget. It shows that many employers slowed down or stopped hiring while waiting to see Chancellor Rachel Reeves’s plans for taxes and spending.
Some companies also say they are still affected by last year’s Budget, when higher national insurance costs made hiring more expensive.
The number of people on company payrolls fell by 149,000 in October compared with the previous year, a drop of 0.5%.
Liz McKeown, director of economic statistics at the ONS, said the figures show the job market is becoming weaker.
Recently, the quality of ONS data has been criticised. A review raised concerns about how reliable the economic figures are. Only one in four businesses replied to the latest Labour Force Survey.
‘Very frustrating’
On Tuesday, the Department for Work and Pensions said former Health Secretary Alan Milburn will lead a review into why youth unemployment is rising.
Mr Milburn has brought together experts from health, business and policy to look into the growing number of young people who are not in education, employment or training.
Meerah Nakaayi, 22, from London, completed a two-year apprenticeship in policy and then worked in the field for two years. She has been unemployed since June.
She said the past six months have been “very frustrating and demotivating.”
“My last interview feedback said there were 290 applications for a policy analyst job in a very specialised area. This shows how competitive the job market really is.”
James Reed, chief executive of Reed Recruitment, told BBC Radio 4’s Today programme that hiring entry-level workers is becoming less attractive for employers.
The government has promised to remove the two-tier minimum wage and introduce one wage rate for all adults.
However, many businesses say this change will make them less willing to hire young people who have little or no work experience.
Kris Gumbrell, chief executive of the Brewhouse and Kitchen pub chain, said the hospitality industry feels “punished” by government policies.
He said that a recent job advert for a front-of-house role received 200 applications within just a few hours.
“Young people have been affected the most,” he said. He also added that the government’s new apprenticeship plans do not work well for the hospitality industry.
Wage growth
The UK unemployment rate is now at its highest level since January 2021, close to the peak seen during the Covid-19 pandemic.
For people who are employed, wages are still increasing faster than prices, but pay rises are slowing down.
Average wages grew by 4.6%, excluding bonuses, between August and October 2025. However, there is a difference between public- and private-sector workers. Government workers received their pay rises earlier this year compared with last year.
In the private sector, pay growth slowed from 4.2% to 3.9%. In the public sector, it increased from 6.6% to 7.6%.
Interest rate decision
The Bank of England will decide on Thursday whether to cut interest rates or keep them at 4%.
Yael Selfin, chief economist at KPMG UK, said a rate cut now seems likely.
She said recent labour market data is strong enough to support a rate cut this week.
However, UK inflation is currently 3.6%, which is higher than the Bank’s target of 2%. Lower interest rates can increase inflation because borrowing becomes cheaper.
Richard Carter, head of fixed interest research at Quilter Cheviot, said the Bank of England is in a difficult position. It wants to support economic growth but also keep inflation falling.
The Office for National Statistics (ONS) will release the latest inflation figures on Wednesday.
Mr Carter said that if inflation is lower than expected, a rate cut could happen before Christmas.
After the ONS figures were released, Work and Pensions Secretary Pat McFadden said the data shows how serious the situation is.
He said the government is investing £1.5 billion to create 50,000 apprenticeships and 350,000 new workplace opportunities for young people, giving them real work experience.
Helen Whately, the shadow work and pensions secretary, criticised the government for introducing what she called “growth-killing policies”.
She said that fourteen months of rising unemployment means many families will struggle over Christmas and enter the New Year without stable income.
Published: 17th December 2025
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