Labour Market Report – September 2025
Labour Market Overview
The latest ONS Labour Market Overview shows that:
The ONS also reported in their Business insights and impact on the UK economy: 4 September 2025 release:
- 48% of businesses with 10 or more employees reported that their staffing costs (including wages, bonuses, national insurance (NI), and pension contributions) had increased over the last 3 months
- 31% of businesses with 10 or more employees expected staffing costs to increase over the next three months
- 31% of businesses with 10 or more employees reported experiencing difficulties recruiting employees in July 2025; around half (51%) of those businesses reported a lack of qualified applicants for the roles on offer, while nearly a third (32%) cited a low number of applications for the roles on offer.
The Employment Rights Bill
The House of Lords made significant amendments to the Employment Rights Bill on the 3rd September, which were rejected by the House of Commons on 15th September. The Bill has now been returned to the House of Lords for further consideration on 28th October.
From April 2026, Statutory Sick Pay will be paid from day one, with no lower earnings threshold – meaning higher costs for employers.
Update from the Low Pay Commission
The Low Pay Commission (LPC) has issued an update on its work around compliance and enforcement of the National Minimum Wage (NMW) and National Living Wage (NLW). While the LPC’s primary role is to advise the Government on the level of wage rates, the Commission highlighted that enforcement remains fundamental to protecting workers’ rights and ensuring fair competition between businesses.
The Commission said the landscape for compliance and enforcement is entering a significant period of change, as the Government’s Employment Rights Bill Roadmap sets out plans for a new Fair Work Agency (FWA) from April 2026. The FWA will bring together the work of existing enforcement bodies, including HMRC NMW, the Gangmasters and Labour Abuse Authority (GLAA), and the Employment Agency Standards Inspectorate (EAS), creating a single enforcement body with an expanded remit. The LPC welcomed the potential benefits of a single enforcement body but warned that the broader scope of the FWA’s responsibilities could add complexity.
As part of its advice, the LPC set out three areas it believes should be priorities as the FWA is established:
- Expanding the data collected and published on enforcement caseloads, including information on contract types, demographics, and whether underpaid workers are in PAYE systems or employed informally.
- Building confidence in the complaints process, including through greater transparency, third-party complaints, and meaningful engagement with employer and worker representatives.
- Learning lessons from delays in NMW naming rounds, which have reduced the deterrent effect by publishing cases many years after underpayment occurred.
The LPC confirmed it will not publish a standalone report on compliance and enforcement in 2025, citing the later timing of its 2024 report, which was published in December and included the latest Annual Survey of Hours and Earnings (ASHE) data and stakeholder submissions. Instead, its 2025 annual report will include analysis of underpayment in ASHE, with the next dedicated compliance and enforcement report expected in the first half of 2026.
Employment Trends
The most recent KPMG and REC, UK Report on Jobs: North of England states that the seasonally adjusted Permanent Placements Index posted below the crucial 50.0 mark again in September, signalling a further decline in permanent staff appointment across the North of England. Recruitment consultancies that took part in the survey commented on a general slowdown in recruitment activity, linked in turn to economic uncertainty, fewer vacancies, and employer budget constraints. There was in contrast a renewed rise in billings received from the employment of temporary staff across the North of England in September, as signalled by the respective seasonally adjusted index posting above 50.0 for the first time in nearly one year.
Both permanent and temporary job vacancies continued to fall across the North of England in September. Demand for permanent workers declined at a solid pace that was slightly faster than in August, while demand for short-term staff fell at a modest pace that was the softest in three months.
Permanent staff availability across the North of England increased in September, which has been the case since the start of 2024. Although the rate of expansion slowed notably since August, it was the second-sharpest seen since December 2020 and rapid overall. According to anecdotal evidence, the uplift in supply was generally driven by redundancies. September data also signalled a further rise in temporary staff availability across the North of England, stretching the current run of growth to just over two-and-a-half years. The rate at which the pool of temporary workers expanded was less pronounced than in the previous month, but sharp overall and in line with the national average. Recruiters noted a general rise in the number of job seekers amid a slowdown in demand for staff.
The CIPD’s People Management update states that a growing proportion of young people who are not in education, employment or training (NEET) are missing out on career support, a report from think tank the Learning and Work Institute (L&W) has found. More than 800,000 16 to 24 year olds are currently classified as NEET, which represents an almost 20 per cent increase since the pandemic. However, only one in four receive help through the benefit system to find work. Around 230,000 young people who claim universal credit are not required to look for employment, while around 200,000 are claiming benefits because they have been assessed to be too ill to work. As a result, many in both groups have little or no contact with work coaches or support, even if they are interested in securing a job, L&W’s report, The Youth Guarantee and the benefits system, has found. Extended for another year, the Youth Guarantee Trailblazer Scheme is trialling ways to ensure all 18–21 year-olds are in work or training. Nearly 1m young people remain NEET (Not in Education, Employment or Training), underlining the scale of the challenge.
GEM Partnership has recently launched a brand new Foundation Engineering and Manufacturing Apprenticeship. This shorter more focused apprenticeship addresses the skills barriers that most advanced manufacturing businesses are facing is going to be a very popular offering to upskill your entry level workforce and recruiting talent into or upskill within the business. To help support attracting and retaining talent, the government are offering employer incentives of up to £3000 to the end employer:
- To take on a 16 – 18 years apprentices employers receive a £1000 incentive paid at £500 at 90 days and 242 days if the apprentice is still on programme
- Additional employer recruit and retain incentive of £2000 per foundation apprentice, paid in 3 instalments of £667 at 90 days, £667 at 242 days and £666 payable if the apprentice starts a new apprenticeship within 6 months of their completion date and remains with the same employer.
The Foundation Engineering and Manufacturing Apprenticeship is aimed at general engineering and manufacturing operatives that are found in environments supporting, for example, production, maintenance, assembly of components and systems, machining operations, fabrication and welding and additive manufacturing functions. They may work across many sectors including automotive, aerospace, energy, advanced and general manufacturing. The apprentice will carry out general engineering and manufacturing tasks consistently using safe working practices, planning and organising resources, and completing tasks within timeframes.
If you would like any more information about this new and exciting apprenticeship, please contact Kelly.lee@gempartnership.com
UK Immigration Policy
Immigration policy continues to evolve, with significant implications for employers.
- A record 1,948 sponsor licences were revoked in the year to June 2025, double the previous year, underlining tougher enforcement.
- The Home Office is progressing with the digital immigration system. 3.2m individual accounts have been created meaning that workers will be able to share their right to work status using a share code. However 800,000 workers have yet to create their own account, meaning their ability to evidence their right to work in the UK may become compromised when non-digital visas are phased out.
- 183,000 work visas were granted in the year to June 2025 – down 36% on the previous year, but still above pre-pandemic levels.
The Home Secretary released a statement advising further changes to the immigration system to include the introduction of a new independent body to deal with immigration and asylum appeals, increasing detention and returns capacity and reforms to family migration.
Meanwhile, asylum applications remain high at 84,200 in 2024, and student visas have become the single largest entry route, sparking debate about numbers and post-study work entitlements. Migrant Watch has published The Future for Student Visas. Study visas are now the single largest route into Britain, accounting for nearly half of all visas issued last year. Nearly two million students have arrived since 2022, with over half projected to stay on beyond the expiration of their visas. Key recommendations include a cap on the number of student visas and an end to the right of students from overseas to work in the UK.
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/september2025
https://www.ons.gov.uk/businessindustryandtrade/business/businessservices/bulletins/businessinsightsandimpactontheukeconomy/4september2025
https://www.peoplemanagement.co.uk/article/1932058/three-quarters-neets-not-receive-support-find-work-research-reveals?bulletin=pm-daily&utm_source=mc&utm_medium=email&utm_content=20250911_PM+Daily_NWL_CIPD_GLO_MIX_MAN_NA.https%3a%2f%2fwww.peoplemanagement.co.uk%2farticle%2f1932058%2fthree-quarters-neets-not-receive-support-find-work-research-reveals%3fbulletin%3dpm-daily&utm_campaign=&utm_term=5636500
https://learningandwork.org.uk/resources/research-and-reports/the-youth-guarantee-and-the-benefits-system/
https://www.gov.uk/government/news/thousands-more-young-people-to-get-training-and-work-support-as-government-extends-45m-scheme
https://www.gov.uk/government/statistics/small-business-survey-2024-businesses-with-employees/longitudinal-small-business-survey-2024-sme-employers-businesses-with-1-to-249-employees
https://www.gov.uk/government/publications/an-update-on-the-lpcs-work-on-non-compliance-and-enforcement/an-update-on-the-low-pay-commissions-work-on-non-compliance-and-enforcement
https://www.gov.uk/government/speeches/strengthening-border-security-and-reforms-to-the-asylum-system
https://commonslibrary.parliament.uk/research-briefings/sn01403/
https://www.migrationwatchuk.org/briefing-paper/522/the-future-of-student-visas