March's Market Insights

Labour Market Overview

The latest  ONS Labour Market Overview shows that:

• The UK unemployment rate rose slightly to 4.4%, with 1.545 million people unemployed
• Youth unemployment remains high, particularly among 16- to 17-year-olds (27.7%) and 18- to 24-year-olds (12.9%)
• The employment rate increased slightly to 75%, with 33.9 million people in work
• The economic inactivity rate remained stable at 21.5%, down 169,000 compared to a year ago
• There are 9.268 million economically inactive people, a slight decrease from last year but 638,000 higher than pre-pandemic levels
• Job vacancies remained largely unchanged at 816,000, slightly below last year but 20,000 above pre-pandemic levels. This means there were 1.9 unemployed people per vacancy from November 2024 to January 2025, up from the previous quarter
• The number of payrolled employees in February 2025 remained steady at 30.4 million, similar to last month and 1.39 million higher than pre-pandemic levels
• Annual pay growth, including bonuses, was 5.9%, while regular pay (excluding bonuses) grew by 5.8%. Adjusted for inflation, real annual growth in regular pay was 2.2%, and total pay was 2.1%
• The claimant count—measuring those receiving benefits primarily due to unemployment—rose to 1.775 million, increasing both month-on-month and year-on-year
• Redundancies increased to 4.2 per thousand employees, slightly higher than the previous quarter and similar to a year ago
• 50,000 working days were lost due to labour disputes in December, slightly fewer than the previous month

The Office for National Statistics (ONS) latest NEET figures saw an increase in the number of young people aged 16 to 24 years not in education, employment or training (NEET) in October to December 2024. The total is estimated to be 987,000, up from 877,000 the previous year. There were an estimated 392,000 young people NEET aged 16 to 24 years who were unemployed and 595,000 who were economically inactive. Economic inactivity has increased by 26,000 over the last 12 months.

New King’s Trust research highlights the struggles of young jobseekers:

• 19% of NEETs apply for jobs daily
• 30% report mental health issues due to unemployment
• NEETs have the lowest levels of happiness and wellbeing of any group

The BBC Bitesize Careers Survey 2025 of 4,000 students aged 13-16 shows changing career priorities. Feeling good about work ranks highest, followed by happiness, then salary. Almost half surveyed (47%) said they would prefer to go to university after finishing school, with a quarter saying an apprenticeship would be their preferred route.

The TUC reports that work-related ill-health is costing the UK economy £415 million per week, with 34 million days lost in 2023 – up by a third since 2010.

The Health Foundation published its final report Action for healthier working lives. Key points:

• 8.2 million working-age people report having a long-term condition that limits their ability to work and only half are in work
• Each year over 300,000 people leave their jobs and end up out of the workforce entirely with work-limiting health conditions
• This has resulted in substantial costs for individuals, employers and the wider economy, and risks deepening existing inequalities
• The report recommends a new approach to prevent people having to leave the workforce due to health conditions

The government has announced it will bolster employment support to unlock work for sick and disabled people. The new plans to improve have been brought forward ahead of wider reform package to fix the ‘broken’ welfare system. 

• 1,000 work coaches will provide intensive employment support as part of the government’s Plan for Change.
• It comes as a new survey reveals the scale of the issue with nearly half of disabled people and those with a health condition saying they don’t trust DWP to support them.

The Trading Environment

New research by S&P Global indicates that business activity remained largely stalled in February for the fourth successive month, with job losses mounting amid falling sales and rising costs.

Increasing inflation has put upward pressure on selling prices for both goods and services and the survey points to a further rise in inflation beyond the latest uptick to 3%. A growing number of firms are reporting the need to raise prices to help offset the impending rise in staff costs announced in the Autumn Budget. Companies also reported that the Budget changes also played a major role in intensifying job cuts. 

The Employment Rights Bill

he Secretary of State for Business and Trade, Jonathan Reynolds, has published the Governments response to the the five consultations on the Employment Rights Bill. The key points:

• Right to guaranteed hours to be extended to agency workers
• Obligation to provide guaranteed hours will rest with the end hirer
• Both the end hirer and the labour provider will be responsible for providing reasonable notice of shift changes and cancellations
• The labour provider will be responsible for making late notice payments but can recoup from the hirer, where the hirer was responsible for the change
• Statutory Sick Pay rate for those earning below the lower earnings level will be set at 80% of normal weekly earnings
• Umbrella companies will be regulated

The Business and Trade Committee’s Make Work Pay: Employment Rights Bill report has gathered input from business groups worried about the rising costs of operations as well as wanting continued workforce flexibility. The Committee has made 16 recommendations to the government including:

• To define as quickly as possible through regulations how many weeks the initial and subsequent reference period should be
• Define what is meant by ‘reasonable notice’ of shifts, ‘moved’ and ‘short notice’ and what groups of workers this would apply to in primary legislation
• Reform the zero hours contracts measures to enhance protection for agency workers but not at the expense of flexibility
• Define what counts as a low hours contract
• Prioritise the review of employee, worker and self-employed status immediately and as a priority address false self-employment
• Set out plans to regulate Umbrella companies

UK Immigration Policy

The Home Office published new eVisa statistics. Over 4 million UK visa holders have successfully created an account to access their e-Visa. An estimated 600,000 people are yet to switch from their physical document to an e-Visa. To support a continued smooth transition to e-Visas, the Home Office is extending the ‘grace period’ to 1 June 2025.

The government has announced it is taking the last major step in the rollout of Electronic Travel Authorisation (ETA) for the millions of visitors who pass through the UK border every year. From 5th March 2025, eligible Europeans can apply for an ETA and will need one to travel to the UK from 2nd April 2025. 

New rules have been laid before Parliament requiring recruitment of care workers in England to prioritise those already in the UK. The policy seeks to utlilise international care workers who have either lost their sponsorship or do not have enough work, due to the significant clamp down on exploitative sponsors. 

A number of changes have been made to the Skilled Worker visa route:

• From April 2025, the minimum salary floor for skilled workers will increase from £23,200 per year (£11.90 per hour) to £25,000 per year (£12.82 per hour)
• Further amendments are being made to ensure salary deductions are handled consistently and to prevent workers from bearing sponsorship costs. The new provisions specify that wage deductions will be subtracted from salary calculations when calculating whether the minimum salary requirements for a skilled worker have been met.
• Where a worker is paid by reference to a ‘going rate’, the going rate will now be based upon a 37.5 hour week, rather than 40 hours.

In addition, new powers have been given to caseworkers to refuse visa applications under the Short-Term Student route where they suspect that the application is non-genuine.

These changes are part of the government’s broader immigration reform strategy, with further measures expected in an upcoming Immigration White Paper.

The National Audit Office (NAO) has published a critical report Immigration: Skilled Worker visas examining how the Home Office manages the Skilled Worker visa route. Key findings include:

• More people are using the Skilled Worker visa route than anticipated in 2020. The Home Office forecasted that they would issue 360,000 visas over the first three years but has issued 961,000
• The Home Office does not have a full understanding of how the Skilled Worker visa route is operating and does not monitor what happens to people at the end of their visa