The number of people in employment in the UK has fallen at the fastest rate since the pandemic, while the country’s temporary workforce has increased, according to the ONS’s latest labour market data.
Estimates for payrolled employees decreased by 155,000 in the year to November 2025 and dropped by 43,000 between November and December. This was the steepest monthly drop since November 2020.
The number of people in temporary employment reached its highest level since 2023, with a total of 1.7 million people, or 5.4 per cent of the workforce, in these positions in September to November 2025.
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James Cockett, senior labour market economist for the CIPD, said the figures showed that employers were “holding back” on long-term investment in light of ongoing uncertainty and concerns about the potential financial impact of the Employment Rights Act, which received royal assent at the end of last year.
“It’s crucial that the government continues to consult with employers to ensure that measures still to be finalised in secondary legislation don’t add further cost and complexity to recruitment and discourage permanent job creation,” he added.
The number of vacancies rose to 734,000, increasing by 10,000 on the previous quarter.
However, unemployment remained high, with the jobless rate for people aged 16 and over rising 5.1 per cent in the three months to November 2025, exceeding estimates from a year earlier. Wage growth excluding bonuses also slowed to 4.5 per cent.
The UK employment rate remained steady in the latest quarter at 75.1 per cent, while economic inactivity reduced to 20.8 per cent.
Patrick Milnes, head of people and work policy at the British Chambers of Commerce, said the steady unemployment rate and falling number of payrolled employees suggested the labour market was still loosening.
“With above inflation rises in the minimum and living wage due in April and a raft of costs associated with new employment legislation, employers will continue to hold back,” he explained. “Added to this we now have fresh uncertainty emerging around tariffs and businesses will be looking to the government for clear signs that it understands the difficulties they face.”
Ben Harrison, director of the Work Foundation at Lancaster University, said weak vacancy levels and “fragile employer confidence” meant jobseekers were facing an increasingly competitive labour market.
“Worryingly for ministers, there are signs unemployment may not yet have peaked,” he added. “The fact that nearly four million workless people want a job should be a major opportunity for a government.”
Harrison called on the government to boost business confidence and create more secure and flexible employment opportunities across the country to help arrest the decline in payrolled employees.
For more information, read the CIPD’s bitesize research on whether your approach to hiring is right