An unsustainable gap is growing between private and public pay in the UK
The UK’s latest job numbers show that it remains a challenging market for employers who are still waiting for a real upturn in economic confidence.
This is the view of Recruitment and Employment Confederation (REC) Chief Executive Neil Carberry, who was commenting on data published by the ONS on Tuesday (14 October) morning.
The unemployment rate climbed to 4.8% in the three months to August, according to the Office for National Statistics (ONS), which was the highest since the March-May period in 2021. The revised estimate of payrolled workers in August 2025 shows an increase of 10,000 from July, though provisional estimates show a decrease of 10,000 for September.
In the three months to September 2025, vacancies in the UK fell by 9,000 (1.3%) to 717,000. This is the 39th consecutive period where vacancy numbers have dropped compared with the previous three months.
“Our own survey of employers’ sentiment suggests employers are feeling better about themselves but are lurking in the shadows of the labour market waiting for better news on the wider economy before they come out into the light,” said Carberry.
“Pay is doing nothing to spook the Bank of England interest rates setters, but the gap between pay set by the labour market in the private sector and those areas where the government is setting pay seems unsustainable.
“This is a function of government ramping public sector awards and the Minimum Wage at the same time as taxing away pay rises in the private sector through its National Insurance raid,” he said.
Carberry noted that progress on economic inactivity has stalled, which shows the pressure on government initiatives to get people back to work and the need to boost private sector hiring.
A Budget for business next month – rather than one that holds firms back – is essential, he said.
“That means avoiding unaffordable tax rises, taking a pragmatic approach to making necessary changes to the Employment Rights Bill, supporting flexible work, and improving public sector recruitment by tackling the higher costs the anti-agency drive in the NHS is driving into the system.”
