The UK’s unemployment rate hit a near five-year high in the last three months of 2025, climbing to 5.2%. Among 16-24 year olds that rate stands at 16.1%, the highest for more than a decade. For 25-34s it’s 4.7%, the highest since 2017. Also of note is that average pay grew by 4.2%, down from a revised 4.4% in the three months to November.

The figures aren’t suprising as SMEs are battling higher employment costs, including increased National Insurance contributions and minimum wage rises.

What this means for your business:

• more applicants per vacancy could actually help your recruitment process
• worker availability will continue to increase
• slowing wage growth may moderate pay pressures – but always consider other benefits and ways to keep your workforce happy in their roles.