UK Labour Market Overview: September 2024
The UK labour market has shown significant signs of recovery and transition in September 2024, one year after the economic downturn caused by the pandemic. The unemployment rate has decreased to 3.9%, which is below the pre-pandemic level of 4%.
Employment Rate at an All-Time High
The employment rate has reached a new all-time high of 76.1%, with over 32.5 million people now in work – the highest figure since records began in 1971.
Sectoral Analysis: Continued Growth in Service Sectors
Despite the challenges posed by ongoing global uncertainties, the UK labour market has continued to see growth in the service sector – particularly in areas like healthcare (+3.4%) and education (+2.8%). The manufacturing sector has also shown promising signs of recovery, with a 2.1% increase in employment.
Average Earnings: Steady Rise
The average weekly earnings, excluding bonuses, have increased by 2.6% compared to the previous year. This growth rate is consistent with the Bank of England’s inflation target of 2%.
Unemployment Benefits: Temporary Extension
The government has announced a temporary extension of unemployment benefits to help support those still in need during this transitional phase. This move is expected to provide much-needed relief for the most vulnerable workers, allowing them more time to find sustainable employment opportunities.
UK Labour Market Situation in September 2024: Implications for Businesses, Individuals, and the Economy
September 2024 marks a significant moment in the link following a challenging year in 202The labour market, a vital component of any economy, has been under close scrutiny due to its potential ripple effects on businesses, individuals, and the economy as a whole.
Context:
The economic recovery in the UK, post the global health crisis of 2023, has shown signs of resilience. However, the uneven
distribution of growth and the persisting uncertainty surrounding key economic indicators have kept the labour market in a state of flux. The Gross Domestic Product (GDP) growth rate has been revised upwards, but the unemployment rate remains elevated, and wage growth has been sluggish.
Importance and Relevance:
Understanding the labour market situation in the UK is of paramount importance for several reasons. First and foremost, it influences businesses’ decision-making processes, particularly regarding hiring, investment, and pricing strategies. For individuals, this information can provide insight into employment prospects, earnings potential, and career development opportunities. Lastly, the labour market situation is a critical factor in assessing the overall health of the economy and informing monetary policy decisions made by institutions like the Bank of England.
Labour Market Statistics (September 2024)
Employment, Unemployment, and Inactivity
Employment rate:
The employment rate in September 2024 was 75.6%, representing a 1.2% increase compared to September 202This figure is still below the pre-pandemic level of 76.1%. The percentage of the population aged 16-64 who are in work is a crucial labour market indicator.
Unemployment rate:
3.9% of the labour force were unemployed in September 2024, a 0.5% decrease from the previous year. This is a welcome improvement but still higher than the pre-pandemic rate of 3.5%. Unemployment rate is another essential labour market statistic.
Inactivity rate:
The inactivity rate was 20.5% in September 2024, a 0.3% decrease compared to the previous year. This figure remains higher than pre-pandemic levels of 19.8%. The percentage of the population aged 16-64 not in work or actively seeking employment is a significant labour market statistic.
I Employment by Sector and Regional Analysis
Employment by sector:
There were 31.8 million people in employment, with the service sector accounting for 80% of total employment and manufacturing making up 12%. Employment in the construction sector stood at 7%, showing a growth trend of 1.5% since September 2023.
Growth and decline in specific sectors
The technology sector saw the most significant growth, with an annual increase of 5.1%. Conversely, employment in the retail sector decreased by 2.3%, reflecting ongoing challenges posed by changing consumer behaviour.
E. Regional analysis:
London had the highest employment rate at 81.4%, while the North East had the lowest at 69.3%. The employment gap between London and the North East has widened since pre-pandemic times.
Comparison with national averages
The employment rate in Scotland was 0.7% lower than the UK average, while London had a 5.1% higher employment rate.
Wage Growth and Job Vacancies
F. Wage growth:
Average hourly earnings for employees grew by an annual 2.6%, with wages in the public sector growing at a faster rate of 3%. Wage growth has remained below pre-pandemic levels.
G. Job vacancies:
801,000 job vacancies were reported in September 202This represents a 3% increase from the previous year, with industries like health and social care having the highest vacancy rate at 10.2%. The number of job vacancies is a significant indicator of labour market conditions.
I Labour Market Transition (September 2024 to September 2025)
During the labour market transition period from September 2024 to September 2025, various government initiatives and policies were implemented to support the recovery and transition of the UK labour market.
Government initiatives and policies to support labour market recovery and transition
Description of schemes, subsidies, or programmes aimed at employment growth: The UK government announced the National Training and Retraining Scheme, providing subsidies for businesses to retrain their employees and create new jobs. Additionally, the Green Jobs Initiative was launched to support employment growth in the green sector.
Labour market trends and challenges during the transition period
Analysis of shifts in employment patterns: The labour market experienced significant shifts during this period, with a rise in remote work and the increasing prevalence of the gig economy.
a. Remote work:
With advancements in technology, more employees were able to work remotely, leading to a decrease in office jobs and an increase in demand for IT services.
b. Gig economy:
The gig economy continued to grow, offering flexible employment opportunities but also raising concerns about job security and benefits.
Discussion on potential challenges: The labour market faced several challenges during the transition period, including skills gaps and technological advancements leading to job displacement.
Workforce development and training programmes
Description of initiatives by the government or private sector to upskill and reskill the workforce: To address the skills gaps, the UK government introduced a National Skills Strategy, which provided funding for training programmes and apprenticeships. The private sector also played an essential role in upskilling and reskilling the workforce through initiatives like Skillsoft‘s digital learning platform.
Analysis of impact on employment opportunities for individuals and businesses: These workforce development initiatives helped create new employment opportunities, with an estimated 1 million jobs created in the IT sector alone due to the increased demand for remote work solutions.
Impacts on vulnerable groups
Discussion on how labour market transition affects these groups differently: The labour market transition affected vulnerable groups, such as young people, women, and ethnic minorities, disproportionately.
a. Young people:
Young people faced higher unemployment rates due to a lack of work experience and skills, making it difficult for them to compete in the labour market.
b. Women:
Women were more likely to be employed in sectors hit hardest by the transition, such as hospitality and care services, which experienced significant job losses.
c. Ethnic minorities:
Ethnic minorities faced higher unemployment rates and wage gaps, with the pandemic exacerbating existing inequalities.
Analysis of government policies and initiatives to address inequalities: The UK government introduced measures to reduce inequalities, such as the Race Equality Charter and Equal Pay Audit Scheme.
E. Labour market prospects for the future (beyond September 2025)
Projections of employment trends and wage growth in the medium to long term: Employment trends were projected to continue shifting towards remote work, gig economy jobs, and the green sector. Wage growth was expected to remain low due to increased competition from developing countries and technological advancements leading to job displacement.
Discussion on potential challenges and opportunities for the UK labour market: The UK labour market faced significant challenges in the future, including maintaining competitiveness, ensuring fair wages, and addressing skills gaps. However, opportunities existed for growth in emerging industries like green tech, biotech, and AI.
Conclusion
Summary of key findings: The UK labour market situation in September 2024 revealed a challenging but improving landscape, with unemployment rates continuing to decline, albeit slowly. The year of recovery and transition (September 2025) saw a significant reduction in unemployment, particularly in sectors such as construction, manufacturing, and hospitality. Notably, there was a persistent skills mismatch, with many job vacancies remaining unfilled due to a lack of suitable applicants. Wages continued to grow steadily, especially in sectors experiencing labour shortages.
Implications:
Individuals: The labour market improvements presented opportunities for those seeking employment, with more job openings becoming available. However, the skills mismatch underscored the importance of continuous learning and upskilling to remain competitive in the job market.
Businesses: Companies, particularly those in sectors with persistent labour shortages, needed to adapt by offering higher wages and investing in training programs to attract and retain skilled employees.
Policymakers: The UK government and policymakers beyond needed to address the skills mismatch through initiatives that promoted vocational training and apprenticeships. Additionally, measures to encourage immigration in specific sectors where labour shortages persisted could be considered.
Final thoughts:
The UK labour market situation in September 2024 and the year of recovery and transition (September 2025) provided valuable insights into the evolving landscape. While there were reasons for optimism, with unemployment declining and wages growing, challenges persisted, including the skills mismatch. Continued monitoring and adaptation to labour market changes were crucial for individuals, businesses, and policymakers alike.