Dr Sangwoo Lee on the Latest ONS Labour Market Statistics

Reflecting on the latest ONS Labour Market Statistics (May-July 2025), Dr Sangwoo Lee, Assistant Professor in the Institute for Employment Research, University of Warwick, said:

"The latest UK labour market data confirms the transformation anticipated in previous quarters, with modest headline improvements obscuring significant structural changes. Unemployment rose to 4.7%, the highest since early 2021, whilst employment rates edged up to 75.2%.

"Traditional employment relationships continue to erode. Payrolled employees dropped by 142,000 annually to July, with a further 127,000 fall by early August to 30.3 million people, the sharpest contraction since the pandemic.

"Yet household data shows rising employment, signalling a profound shift toward non-traditional work rather than genuine job creation. Vacancies fell for the 38th consecutive period to 728,000, some 59,000 below pre-pandemic levels. This has pushed the unemployed-to-vacancy ratio to 2.3 from 1.5 in 2023.

"Wage growth remains resilient at 4.8%, delivering 0.7% real growth but risking prolonged tight monetary policy, though labour market deterioration may prompt rate cuts in 2026.

"Overall, the divergence between payroll and household data confirms a lasting reconfiguration towards temporary, contract, and gig work. This structural shift will likely accelerate through 2025-26, potentially stabilising around a different baseline by 2027.

"The greatest risk lies less in headline unemployment than in weakening job security and benefit coverage. This transformation requires new frameworks, including updated classifications and stronger protections for non-traditional workers."