UK Unemployment Climbs to 5.1%, Impacting Young Workers Most

The UK’s unemployment rate has climbed to 5.1% for the three-month period ending in October. This marks a noticeable increase from 4.3% a year earlier. The rise in unemployment particularly impacts younger workers, with youth unemployment seeing significant growth.

Impact on Young Workers

Data from the Office for National Statistics (ONS) highlights that 85,000 young people aged 18 to 24 have become unemployed since July. This is the largest increase in youth unemployment since November 2022. The ONS characterized the labor market as “subdued,” emphasizing that younger demographics are especially affected.

Hiring Trends and Employment Statistics

• The number of employees on company payrolls fell by 149,000, or 0.5%, year-on-year in October.
• The current unemployment rate is the highest observed since January 2021, nearing levels recorded during the peak of the COVID-19 pandemic.

Employers are reportedly cautious about hiring, often delaying decisions until they have clarity on government fiscal plans. Many businesses remain affected by last year’s national insurance increases that raised hiring costs.

Voices from the Ground

Young people express frustration over the competitive job market. For instance, Meerah Nakaayi, a 22-year-old London resident, commented on the challenges she faces in finding employment. After completing a two-year apprenticeship, she has been searching for work since June, noting that one recent policy analyst role attracted 290 applicants.

Wage Growth and Economic Pressures

Despite the rise in unemployment, wages are growing faster than inflation for those still employed. Average wage growth in the UK stands at 4.6% between August and October, though this figure varies between the private and public sectors. Pay rises for public sector employees have outpaced those in private companies recently.

Government Response and Future Outlook

The government plans to investigate youth unemployment and has committed £1.5 billion to create 50,000 apprenticeships and 350,000 new job opportunities for young individuals. However, critics, including shadow work and pensions secretary Helen Whately, argue that existing policies could hinder growth and exacerbate job losses.

As the Bank of England prepares to announce its interest rate decision, economic experts suggest that the labor market data may influence a potential rate cut. However, current inflation levels remain nearly double the Bank’s target, complicating the monetary policy landscape.

With ongoing economic uncertainties, both the Bank of England and government policymakers will closely monitor these labor trends to inform their strategies as we head into the New Year.