Labour Market Report – January 2025
Labour Market Overview
The latest ONS Labour Market Overview shows that:
Employment Trends
The KPMG and REC, UK Report on Jobs: North of England have reported that their January survey data showed that permanent staff placements fell at a substantial and accelerated pace. This marked the fifth decrease in the respective seasonally adjusted index in consecutive months, to its lowest since June 2020.
There was a further rise in permanent staff availability in the North of England in January, thereby stretching the trend of growth to just over one year. The increase reportedly reflected a challenging jobs market and a subsequent rise in redundancies. Recruitment agencies in the North of England signalled a further rise in availability of short-term staff in January, marking a near two-year run of expansion. The rate of growth in temporary staff supply was steep and the joint-strongest in just over four years (equal with October 2024). This is seen to be linked to a hiring slowdown and a rise in redundancies.
Salaries awarded across the North of England rose moderately in January, marking nearly four years of wage growth. The rate of increase was the weakest for three months and noticeably softer than the average seen since starting pay began rising in early 2021. Where growth was reported, panellists mentioned a rise in placements for senior roles and increased pay offers to secure candidates. As has been the case on a monthly basis since the end of 2023, there was a further rise in hourly wages across the North of England in January. The local rate of temp pay inflation was only marginal and the softest seen across current run of growth, but still stronger than the UK average.
Total Jobs’ latest survey shows that over 4 million workers are actively job-hunting, with:
- 42% seeking new roles primarily for higher salaries
- Candidates expecting a 13% pay increase on average
- 49% prioritising work/life balance when salary expectations are met
The CIPD’s report, “The Changing Face of the Youth Labour Market,” reveals significant shifts over the last two decades and calls for government action. Key findings include:
- A decline in youth employment due to economic inactivity
- A rise in educational attainment, with nearly half of those aged 25-29 now holding a degree
Reed’s CBE James Reed posted on Linkedin ‘There is mounting evidence that hiring is being hit by a “triple whammy” of negative factors – the looming increase in employers’ National Insurance, the new Employment Rights Bill which includes day one workplace rights, and the big increase in the minimum wage’. This is confirmed on the Reed.co.uk jobs data which shows that vacancies are down 32% in January compared with January last year.
Immigration Policy
The Home Office has updated its eVisa factsheet, highlighting a shift from physical documents to digital proof of immigration status. Since March 2024, over 3.1 million people have registered for eVisas. The Home Office has announced the automatic conversion of pre-settled status to settled status for EU citizens, with effect from the end of January. As initial Ukraine visas near their expiration date, the new Ukraine Permission to Stay Extension Scheme offers a further 18 months residence in the UK to eligible applicants but applicant must apply within 28 days of their current permission expiring.
The government has intensified efforts to tackle illegal working, with nearly 1,000 enforcement visits in London alone, resulting in 770 arrests and 462 civil penalty notices issued. The Migration Observatory’s “2024: A Year in UK Migration” report examines post-Brexit and pandemic migration trends, noting that immigration is likely to decrease due to stricter visa policies.
Forthcoming Changes
The Federation of Small Businesses’ latest research indicates that 9 out of 10 small employers have concerns about measures in the Employment Rights Bill. Key findings include:
- 67% will reduce staff recruitment
- 56% will cancel or scale down investment and expansion plans
- 32% will reduce headcount before the measures take effect
Small employers also anticipate challenges in hiring vulnerable groups:
- 87% will alter recruitment or employment practices
- 66% will avoid hiring individuals with a poor work history
- 33% will avoid hiring those who have never been employed before
The British Chamber of Commerce’s latest Quarterly Economic Survey, conducted after the October budget, found:
- 63% of businesses now cite tax as a concern
- Business confidence has dropped to its lowest level since the Autumn 2022 mini-budget
- 55% expect prices to increase in the next three months, with labour costs being the primary driver
- 24% of businesses have decreased investment
Commentary
Maria Miller – Operations Director (Maria.Miller@gempartnership.com)
GEM are looking forward to working with our clients advising on all forthcoming changes initiated from the Employment Rights Bill and associated policy changes, impacting our industry sector. As a training provider we are also working with all relevant governing bodies to stay at the forefront of changes by Skills England. GEM hold direct funding and are able to support with a range of upskilling and staff development programmes to aid your workforce development.
I would welcome the opportunity to discuss the changing landscape with you and outline the support and programmes we offer that can enhance your People plans.
References
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/january2025
https://cps.org.uk/wp-content/uploads/2025/01/Punching-Down.pdf
https://www.peoplemanagement.co.uk/article/1901698/two-five-firms-facing-staff-shortages-amid-fastest-job-cuts-four-years-reports-find
https://learningandwork.org.uk/resources/research-and-reports/worlds-apart/
https://www.totaljobs.com/media-centre/new-year-new-career-four-million-workers-looking-for-a-new-job-in-january
https://www.linkedin.com/posts/chairmanjames_lovemondays-lifeatreed-improvinglivesthroughwork-activity-7287452705931841536-XRQf?utm_source=share&utm_medium=member_ioshttps://www.cipd.org/uk/knowledge/reports/changing-youth-labour-market/
https://www.deloitte.com/content/dam/assets-shared/docs/about/2024/deloitte-disability-inclusion-at-work-2024-a-global-outlook.pdf?dlva=1
https://www.lancaster.ac.uk/work-foundation/news/think-tank-calls-for-national-reset-on-workforce-health-in-2025
https://www.gov.uk/government/news/surge-in-activity-to-crack-down-on-illegal-working-across-the-country
https://migrationobservatory.ox.ac.uk/resources/commentaries/2024-a-year-in-uk-migration-issues/
https://kpmg.com/uk/en/home/media/press-releases/2025/02/kpmg-and-rec-uk-report-on-jobs.html