Labour Market in the Regions of the UK: September 2025

16th September 2025

The September 2025 edition of the Labour Market in the Regions of the UK report, published by the Office for National Statistics (ONS), offers a granular view of employment, unemployment, and economic inactivity across the UK’s constituent nations, English regions, and parliamentary constituencies. As the country continues to navigate post-pandemic recovery, inflationary pressures, and technological transformation, this report reveals both encouraging signs and persistent challenges in regional labour markets.

Employment Trends: A Subtle Decline
Across the UK, the number of payrolled employees has seen a modest but notable decline. Between July 2024 and July 2025, payrolled employment fell by 142,000 (0.5%), with a further drop of 6,000 between June and July 2025. The early estimate for August 2025 suggests a continued downward trend, with a year-on-year decrease of 127,000 employees, bringing the total to 30.3 million2.

This contraction is not evenly distributed. Regions such as the North East and Wales have experienced sharper declines in employment, while areas like London and the South East have shown relative resilience, buoyed by growth in professional services and tech sectors. Scotland, meanwhile, has seen mixed results, with urban centres like Edinburgh maintaining stable employment levels, while rural areas face rising inactivity.
Unemployment and Economic Inactivity: A Mixed Picture
Unemployment rates remain relatively low by historical standards, yet economic inactivity—those neither working nor actively seeking work—has crept upward in several regions. This is particularly evident in parts of Northern Ireland and the West Midlands, where long-term health conditions and caregiving responsibilities are contributing to higher inactivity rates.

The report highlights that while headline unemployment figures may appear stable, they mask deeper issues of participation. For example, younger workers and older adults are disproportionately represented among the economically inactive, suggesting barriers to re-entry into the workforce that go beyond job availability.

Sectoral Shifts and Skills Gaps
The labour market is undergoing a structural transformation. Sectors such as renewable energy, digital services, and logistics are expanding, while traditional manufacturing and retail face contraction. This shift is creating regional disparities in job opportunities and exposing skills mismatches. The World Economic Forum’s concurrent analysis underscores that adaptability, digital literacy, and resilience are now among the most valued workplace traits.

In response, local enterprise partnerships and devolved governments are ramping up training initiatives. Scotland’s government, for instance, is investing in green skills and digital apprenticeships to align workforce capabilities with emerging industries.

Policy Implications and the Road Ahead
The September 2025 report serves as a crucial tool for policymakers. It underscores the need for targeted interventions—whether through retraining programs, childcare support, or health-related employment schemes—to address regional inequalities and boost participation.

Moreover, the data suggests that national strategies must be flexible enough to accommodate local realities. A one-size-fits-all approach risks leaving behind communities that are already vulnerable to economic shocks.

In sum, the UK’s labour market is at a crossroads. While the overall picture is one of cautious stability, the regional nuances tell a more complex story—one of divergence, adaptation, and opportunity. The September 2025 report is not just a statistical bulletin; it’s a call to action for a more inclusive and forward-looking labour strategy.

Read the full ONS report HERE