By Meghna Sharma, Research Economist at IES.
Since April 2024, employers faced higher National insurance contributions and rises in National Living Wages leading to a real increase in labour costs especially in low to mid-pay jobs. Sectors such as administrative & support services, health & social work, education, transportation & storage, and public admin & defence are particularly affected with more than 2% real increase in employer costs. Employers can respond to these increased costs either by reducing vacancies and/or by cutting down on investments in non-monetary employee benefits. We examined the change in demand for these sectors from 2024 Mar-May quarter to 2025 Mar-May quarter from Adzuna portal. While some sectors experienced noticeable declines in labour demand others saw modest growth which may reflect the impact of rising employer costs on hiring activities. Transportation & storage (-38%), administrative & support services (-23%), and public administration & social security (-4%) witnessed a decline in demand, whereas education (9%) and human health (9%) saw modest increases. Below is the graph showing change in labour demand and number of payrolled employees for these sectors.
Source: Adzuna portal and HMRC PAYE
Gender composition and economic inactivity
Gender composition of the labour force as well as economically inactive population can play a key role in better understanding the story behind these trends. As per Labour Force Survey (LFS), females are over-represented in education, human health and social care activities, as well as public administration and defence sectors, whereas males dominate transportation and storage. Moreover, the data shows a balanced representation of females and males in administrative and support services.
For the same period, patterns in economic inactivity for 16-64 years old also vary by gender. There is a smaller decline in female inactivity as compared to males; 3% vs, 5%. This comprises discouraged females as well as those with family responsibilities. According to Office for National Statistics (ONS), discouraged workers are those aged 16-64 who are not actively seeking employment due to perceived lack of suitable jobs. Economic inactivity has been a persistent issue in the UK, reflecting demographic challenges, including unequal caring responsibilities and rising health-related exits from the workforce.
Labor Force Survey data shows an 80% increase in the number of discouraged female workers from 2024 to 2025, i.e.,10,000 to 18,000 as opposed to 40% increase amongst males from 11,000 to 16,000. We also notice a smaller decline in female inactivity (9%) due to family responsibility in comparison to males (13%) for the same period. This suggests women are more susceptible to economic inactivity and since socio-economic policies can impact women more strongly, employers need to consider how to respond to changing policy landscapes.
Factors contributing to inactivity
Aggregate labour demand analysed from 2024 to 2025 on Adzuna shows modest increase in demand for jobs in education and human health & social work activities; both with more than 50% female labour force. There is also a marginal increase (0.6% to 1.5%) in number of payroll employees in these sectors from last financial year as per the LFS. Despite improvements in job postings and number of employees, a higher inactivity amongst females is a matter of concern. Job growth in these sectors may not be sufficient to offset job losses in others which could be further impacted due to increased employer costs. Moreover, lack of inclusive and enabling workplace environment can influence women’s ability and/or decision to work as indicated by a higher number of discouraged females out of work.
As highlighted by Parenting Daily, women are 7% more likely to be out of work due to caring commitments, especially acute to those in their 30s. It is undebated that people with caring responsibilities need better socio-emotional support to be able to participate in the economy. Additionally, results from a systematic review also point at systemic gender asymmetries in bearing responsibility for household tasks where women report higher emotional fatigue and lower satisfaction. Women experiencing mental fatigue due to household and caring responsibilities certainly need targeted support to feel more encouraged to look for work as well as be able to continue work once hired. A supportive work environment for women including flexible working options, carers support, and maternity benefits can be beneficial to bring down economic inactivity.
Way ahead
While the UK aims to boost worker’s rights and protect women from unfair dismissal, improved access to flexible working, and/or prevention of harassment at workplace, inactivity rates amongst women suggest an urgent need for effective implementation and monitoring of what is promised. Additionally, employers play a crucial role in investing in re-entry pathways and socio-emotional support for women to help them balance work and care. A research by workplace wellbeing professional highlights wellbeing gaps amongst SMEs and large employers on providing wellbeing support to their employees; “78% of large corporates offer mental health support, whereas only 41% of small businesses do the same”. Women can be unfairly impacted if investments on workplace wellbeing support are compromised as a cost cutting measure by employers especially SMEs.
Tackling female inactivity requires more than statutory promises. Employers and policymakers need to work together to provide affordable childcare, targeted training for women returning to work, and stronger re-entry pathways. Small changes in workplace design such as flexible schedules, carers’ leave, and mental health support can have large effects on women’s participation. With demographic pressures and labour shortages already visible, investing in sustained economic participation of women is not only a matter of fairness but also a necessity for the UK’s long-term growth.
IES is an independent, apolitical, international centre of research and consultancy in public employment policy and HR management. It works closely with employers in all sectors, government departments, agencies, professional bodies and associations. IES is a focus of knowledge and practical experience in employment and training policy, the operation of labour markets, and HR planning and development. IES is a not-for-profit organisation.
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