Britain’s unemployment rate has remained at the highest level for nearly five years as official figures reveal deepening jobs woes in the retail and hospitality sectors.
The Office for National Statistics (ONS) said today that the rate of unemployment was unchanged at 5.1 per cent in the latest three months to November 2025.
Meanwhile wage growth has fallen once again with regular earnings growth dropping to 4.5 per cent in the period, down from 4.6 per cent in the previous three months.
This stayed at the lowest level since April 2022, just after the pandemic ended. With Consumer Prices Index inflation taken into account, wages were 0.9 per cent higher.
ONS figures also estimated that the number of employees on payrolls fell 43,000 in December, with some of the biggest falls in the hard-hit retail and hospitality sectors.
Annual average regular earnings growth was 7.9 per cent for the public sector and 3.6 per cent for the private sector.
The unemployment rate remained unchanged at 5.1 per cent in the three months to November
Chancellor Rachel Reeves visits the new Darlington Economic Campus site last Friday
The ONS said the public sector annual growth rate is ‘affected by some public sector pay rises being paid earlier in 2025 than in 2024’, adding: ‘This has caused a base effect that has now reached its peak and will phase out over the next three months.’
Early estimates for vacancies for October to December last year show an increase of 10,000 or 1.3 per cent to 734,000, compared with July to September.
It comes after retail and hospitality businesses were badly hit by crippling tax raids imposed by Chancellor Rachel Reeves in her Budget last autumn.
ONS director of economic statistics Liz McKeown said: ‘The number of employees on payroll has fallen again, with reductions over the last year concentrated in retail and hospitality, and reflecting ongoing weak hiring activity.’
She added: ‘While there was a slight increase in vacancies in the latest period, the overall number has remained broadly flat over the last six months, following a long decline.
‘Wage growth in the private sector has slowed to its lowest rate in five years while public sector wage growth remains elevated reflecting the continued impact of some pay rises being awarded earlier than they were last year.’
Susannah Streeter, chief investment strategist at the Wealth Club, said: ‘Nervous employers are still holding off hiring amid rising payroll costs and economic uncertainty.
‘The UK’s unemployment rate has stayed stubborn at 5.1 per cent but it looks set to head higher in the months to come. Fresh tariff threats could see the door slammed on more jobseekers, as some firms batten up the hatches as harsher trade winds whip up again.
‘Conditions are tougher in the labour market, as many companies keep vacancies unfilled, anxious not to increase overheads further. As the competition for jobs has increased, wage growth has fallen back.’
She added: ‘In the private sector wage growth has come down markedly, with annual average regular earnings at 3.6 per cent, down from 3.9 per cent at the last reading.
‘The public sector annual growth rate stayed at the hot level of 7.9 per cent but it’s due to some public sector pay rises being paid earlier in 2025 than in 2024 – this effect will start to ease off.’