UK unemployment rises to 5.2% as wage growth slows - what it means for you

The UK unemployment rate has risen to 5.2% in the three months from October to December 2025, according to new data from the Office for National Statistics (ONS). This is up from 5.1% in the previous quarter and is the highest rate since early 2021.  

The unemployment rate measures the share of adults aged 16 and over who are not working but are actively looking for work. 

The ONS also reports that the economic inactivity rate – meaning people who are not working and not looking for work – fell slightly to 20.8%. This matters because it shows more people are now available to join the workforce compared with earlier in the year.  

Job vacancies remain steady 

The number of job vacancies has stayed almost flat. Early ONS estimates show around 726,000 vacancies between November 2025 and January 2026. That’s a small increase of 2,000 vacancies (0.3%) compared with the previous quarter. In short: there aren’t many new jobs being created right now, but more people are looking for work.  

Wage growth is slowing down 

Pay packets are still growing, but more slowly than before: 

• Average earnings (including bonuses) rose 4.2% over the year.  

• Pay growth in the private sector was 3.4%, the lowest in five years. 

• Pay growth in the public sector was much higher at 7.2%, helped by pay rises that were brought forward earlier in 2025.  

When we adjust pay for inflation – meaning we look at how far your money actually goes – wages rose by around 0.5%, or 0.8% depending on which inflation measure is used. This means pay is rising, but not by much in real terms. 

What this means for the economy 

Higher unemployment and slowing wage growth point to a weaker labour market. Some economists say this may increase the chance of an interest rate cut later this spring, as the Bank of England looks for ways to support the economy. 

For now, the situation is getting harder for those looking for work and those in work alike: finding a job is getting harder, pay rises are losing steam, and the economy is still under pressure.