Labour Market Report – October 2025
Labour Market Overview
The latest ONS Labour Market Overview shows that:
The Institute for Employment Studies interim JobsPlus Pilot Implementation and Process Evaluation found that one in four working-age adults who are economically inactive live in social housing, many without access to employment support. The JobsPlus programme aims to address this through community-led employment initiatives.
Government Policy
The government has announced expanded job support for tens of thousands of people with mental health conditions, musculoskeletal problems or high blood pressure. Around 1,000 specialist Jobcentre staff are being redeployed to support people on sickness benefits. These Pathways to Work advisers are now based in every Jobcentre in England, Wales, and Scotland, delivering the commitment made by the Government in March to help 65,000 people with Limited Capability for Work and Work Related Activity by the end of this financial year.
A further £167 million has been allocated to extend the Connect to Work programme to nine new areas of England, This includes embedding employment advisors in GP surgeries and mental health services, alongside community referral partners, treating employment as part of holistic health support. The North East will receive £49.7million, Kim McGuiness the North East Mayor has advised:
“The North East is an amazing place to work but too many people are facing barriers when they’re trying to find a job. However, that’s all about to change as we help thousands of people back to the workplace with tailored support that tackles the issues they’re facing. It’s all part of our New Deal for North East Workers, we’re helping local people secure the jobs that work for them. Because when everyone can succeed, our communities and our economy thrive.”
A new digital ID system will be introduced to streamline identity verification and combat illegal working. The scheme will become mandatory for right to work checks by the end of the Parliament and will be available to all UK citizens and legal residents, reducing administrative burdens and reliance on paper documentation. The roll-out will in time make it simpler to apply for services like driving licences, childcare and welfare, while streamlining access to tax records. The new digital ID will be held on people’s phones, just as millions already use the NHS App or contactless mobile payments.
Young People
The Chancellor, Rachel Reeves, has announced that every eligible young person who has been on Universal Credit for 18 months without earning or learning will be guaranteed paid work through a new Youth Guarantee. The initiative builds upon existing employment support and sector-based work academies to provide targeted support for young people at risk of long-term unemployment.
The Prime Minister has announced reforms aimed at improving young people’s skills and employability, setting a new target for two-thirds of young people to participate in higher-level learning – academic, technical or apprenticeship – by age 25, up from 50%. A sub-target aims for at least 10% of young people to pursue higher technical education or apprenticeships by 2040.
The Employment Rights Bill
Matthew Taylor CBE has been appointed as the first Chair of the new Fair Work Agency which is planned to take over responsibility for tackling the enforcement of employment rights from April 2026. Matthew Taylor led the influential Taylor Review of Modern Working Practices in 2016, which provided the foundation for many of the transformative reforms now being delivered through the Employment Rights Bill. His work on this review led to him being recognised in the 2019 Birthday Honours list, being appointed a CBE. He is quoted as saying: “For years inside and outside Government I argued that employers and workers need a single enforcement body for employment rights. It is an honour to be asked to be the first Chair of the Fair Work Agency, the body that will meet that need. The Agency has a vital job in strengthening labour market compliance and enforcement. This is essential to provide workers with protection and employers with a supportive and level playing field on which to invest and grow.”
The Employment Rights Bill is scheduled to return to the House of Lords on 14th November 2025, to consider the amendments made by the House of Commons. This is the final stages of the Bill passage and is part of the “ping-pong” process where the two houses debate and agree on the final wording of the bill. Once the Bill is agreed by both the House of Commons and the House of Lords I can receive Royal Assent and become law.
UK Immigration Policy
Home Secretary, Shamana Mahmood, has announced a new contribution based settlement model requiring migrants to be lawfully resident for at least 10 years before applying for settlement – doubling the current requirement. Time can be reduced for those meeting earnings or integration criteria while non-compliant individuals may face longer waits or refusals. The specific rules will be set out following consultation. The number of visas available for global innovators, entrepreneurs, and scientists will double from 2026, with a focus on high-potential individuals from top global universities and creative industries.
The UK and Spain have signed a Strategic Bilateral Framework to strengthen cooperation and explore a balanced Youth Mobility Scheme. This is seen as further commitment to establishing an EU/UK Youth Mobility Scheme.
Commentary
Maria Miller – Operations Director (Maria.Miller@gempartnership.com)
GEM are looking forward to working with our clients advising on all forthcoming changes initiated from the Employment Rights Bill and associated policy changes, impacting our industry sector. As a training provider we are also working with all relevant governing bodies to stay at the forefront of changes by Skills England. GEM hold direct funding and are able to support with a range of upskilling and staff development programmes to aid your workforce development.
I would welcome the opportunity to discuss the changing landscape with you and outline the support and programmes we offer that can enhance your People plans.
References
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/october2025
September 2025 UK Labour Market Update: Cooling Job Market Fails to Dent Pay Gains
https://www.gov.uk/government/news/ramped-up-job-support-for-people-on-sickness-benefits
https://www.gov.uk/government/news/job-advisers-to-be-embedded-in-gp-surgeries-as-tens-of-thousands-more-sick-and-disabled-people-offered-help-into-work
https://www.gov.uk/government/news/new-youth-guarantee-for-eligible-young-people-and-funding-for-libraries-in-all-primary-schools
https://www.gov.uk/government/news/prime-minister-unveils-reforms-to-transform-further-and-higher-education
https://www.gov.uk/government/news/new-digital-id-scheme-to-be-rolled-out-across-uk
https://www.employment-studies.co.uk/resource/jobsplus-pilot-implementation-and-process-evaluation
https://www.gov.uk/government/news/new-contribution-based-settlement-model-to-reduce-net-migration
https://www.gov.uk/government/news/strategic-bilateral-framework-between-the-kingdom-of-spain-and-the-united-kingdom-of-great-britain-and-northern-ireland-3-september-2025
https://www.gov.uk/government/news/new-agency-chair-appointed-to-crack-down-on-minimum-wage-underpayment-and-worker-exploitation