Jobs treading water and wages cooling ahead of big tax and minimum wage changes in April

22nd March 2025

The number of payrolled jobs has flatlined and average total weekly pay levels have fallen by 1 per cent in real terms since October, adding to a picture of wider economic stagnation ahead of the Chancellor's Spring Statement and big policy changes coming into effect this April, the Resolution Foundation said.

The latest HMRC payroll data showed that employee jobs have been broadly flat since May - growing by just 3,000 (0.01 per cent). With the population continuing to grow, the Resolution Foundation’s own estimates suggest the working age employment rate has now been falling for the past 21 months (since March 2023), down to 75.2 per cent in the three months to January 2025. This scale of falling employment rate is consistent with falls seen in recent recessions.

Pay packets have largely bucked this trend, with real wage growth above 2 per cent for nine of the past twelve months. However, more recent data suggests that this recovery has run out of steam, with average total weekly wages falling by 1 per cent in real terms between October 2024 and January 2025 (regular pay has fallen by 0.1 per cent over this period).

This was driven by a slowdown in nominal private sector regular pay to an annualised 3.6 per cent growth in the three months to January, which may give the Bank of England some comfort when it contemplates interest rate cuts.

The Foundation notes that this recent pay recovery will be sorely missed as average regular weekly earnings today are (at £667) just £24 higher in real terms than they were back in April 2008.

Nye Cominetti, Principal Economist at the Resolution Foundation, said:

"The labour market is now looking a lot more like the wider UK economy, with the jobs market treading water and the recent pay recovery starting to run out of steam. Fresh momentum will be needed to address the near two-year employment decline in particular.

“This data points a sobering picture ahead of the Spring Statement and a massive month for employers, as payroll taxes rise amidst another chunky increase in the minimum wage."