London lags behind as regional wage growth surges

After centuries of dominance, it appears the capital’s grip on the employment market is loosening in some respects. Despite having the strongest year on year employment growth at 6.7%, with healthy monthly growth of 0.9% (a higher average than all regions), employment rates in all other regions have been more stable, with some even experiencing increases. 

Employment Growth Signals a Broader Shift

Employment Hero’s inaugural Annual Jobs Report shows the shift follows steep post-Budget curves in employment rates across the UK, with London’s previously rapid growth slowing from 1.4% pre-Budget to 0.9% in July 2025. It suggests that while the city remains a hub for employment opportunities, its rapid gains may be plateauing.

By contrast, all other regions have seen surges in employment growth. In The East, the figure stands at 2.2%, with 2% in The South, 1.5% in the North and 1.4% in The Midlands. The 

London Leads On Wages, But Growth Is Slowing

Wages in London still far outweigh the rest of the UK. Compared to the second-highest-paying region, The South, earnings are more than 14% higher and 17% higher than The North. But there’s a more complex picture emerging: wages have stalled, with July figures showing negative growth of 0.8% YoY.  Meanwhile, the North is experiencing the steepest wage increases at +8.7% YoY, closely followed by the East at +7.7%, reflecting faster gains outside London.

Who’s Gaining Ground?

Wage growth also varies by generation and gender across regions. Gen Z employees in the North and East have benefited from entry-level salary boosts, while Millennials in London have seen relatively slower growth. Similarly, female employees in regions like the East and North are experiencing stronger YoY wage growth than their male counterparts, echoing national trends of persistent gender wage disparities despite recent gains.

Thirty-year-old Frontend Engineer, Jess, was one of many millennials caught out by the capital’s comparatively sluggish wage growth. 

“I was working as a Full-stack Engineer in London for the last 4 years, but life was getting too expensive. I work from home, so it felt like the rising costs of things like rent and general living just weren’t worth it, especially because I don’t need to go into an office,” she says. 

She took the leap to relocate to Cambridge when living and working in London became unsustainable. Since relocating to the East, her wages stretch much further.   

“The living costs here are slightly cheaper and I’m still earning the same, so overall I have a much better quality of life,” she adds.

The main driver of regional recovery has been full-time employment. In London it rose to 2.5% month-on-month, outpacing part-time and casual roles, which remain weaker. The North, Midlands, East, and South show similar patterns, with full-time employment recovering fastest, suggesting that businesses are resuming long-term hiring across regions, while temporary roles continue to lag.

A Cautiously Optimistic Workforce

Regional sentiment mirrors national anxieties, too. Many employees remain cautious about mobility, with younger workers especially prioritising job security over career ambition. In the North and East, where growth is strongest, optimism is slightly higher, yet most employees still cite competitive labour markets and economic uncertainty as barriers to confidence.

Job-Hugging Takes Hold

Kevin Fitzgerald, UK Managing Director at Employment Hero adds: “While the labour market is showing early signs of recovery, our data shows we’ve still got a long way to go before workers feel confident again. With most people holding a negative view of the jobs market, it’s no surprise we’re seeing more ‘job hugging’ as employees look to weather the storm. But this isn’t a long-term solution. Job mobility is key for growth – both for people and businesses.”

Employment Hero’s regional data underscores a slow but steady U-shaped recovery, with London leading in overall employment levels. But the meaningful gains experienced by other regions are by no means insignificant. If these trends solidify, it could spark the beginning of a more geographically balanced UK labour market. The coming months will be crucial in determining whether or not that happens.