Prime Minister Burnham takes office facing a UK jobs market that, while holding steady in some headline figures, reveals a challenging landscape for both employers and employees. Official data from the Office for National Statistics (ONS) paints a picture of minimal real wage growth, declining job opportunities, and a worrying rise in redundancy threats.
The Big Picture: Employment and Unemployment
The UK employment rate for those aged 16 to 64 years was estimated at 75.1% in March to May 2026. This represents a marginal decrease of 0.1 percentage points on the year, though it saw a slight uptick of 0.1 percentage points on the latest quarter. For job seekers, the unemployment rate stood at 4.9% for people aged 16 and over in the same period. This is up 0.2 percentage points on the year but down 0.1 percentage points on the latest quarter, falling slightly below economists' forecasts of 5%. However, it's worth noting the rate had climbed to 5.2% in the final quarter of 2025, marking the highest in almost five years.
Economic inactivity, which measures those not in employment and not looking for work, was estimated at 20.9% for people aged 16 to 64 years in March to May 2026, showing a slight decrease of 0.1 percentage points both on the year and on the latest quarter.
The ONS has stated that Labour Force Survey (LFS) data is currently less reliable than usual and should be considered alongside other labour market sources, such as workforce jobs or Pay As You Earn (PAYE) data. Their view remains that RTI (PAYE) currently provides the most reliable measure of employees.
The Squeeze on Wages and Household Finances
For many, the most immediate concern is pay. Annual regular pay growth, which excludes bonuses, was 3.4% in the three months to May 2026. This matches April's pace and consensus forecasts, but critically, it's the joint-lowest since October 2020. When adjusted for CPIH inflation, real terms regular pay growth was a mere 0.1% in the three months to May 2026, indicating that for most, their take-home pay is barely keeping pace with the cost of living.
Total pay, which includes bonuses, saw annual growth of 4.3% in the three months to May 2026, down from 4.4% in the previous quarter. In real terms, total pay growth was 1.2%. A significant disparity exists between sectors: annual regular earnings growth was 5.5% for the public sector, while the private sector saw a much weaker 2.9% – its weakest since 2020. This gap highlights a growing divide in financial security across the workforce.
Employers' Outlook: Declining Opportunities
From an employer perspective, the number of payrolled employees in the UK fell by 85,000 (0.3%) between May 2025 and May 2026. Early estimates for June 2026 show a further decrease of 71,000 (0.2%) on the year, bringing the total to 30.3 million. This suggests a cautious approach to hiring.
Job vacancies, a key indicator of labour demand, also continued their downward trend. The estimated number of vacancies in the UK decreased by 7,000 (0.9%) to 712,000 in April to June 2026. While this is the smallest monthly decline for several months, it's almost half the level seen in 2022, indicating fewer opportunities for those seeking work or career progression.
The Redundancy Shadow: A Growing Concern
Perhaps the most stark indicator of a weakening market is the rise in redundancies. The ILO redundancy rate for all in the UK was 3.8 per 1,000 employees in February to April 2026. Alarmingly, 2025 was the most severe year for redundancy warnings since 2020, with 315,605 jobs flagged for potential redundancy.
The trend continues into 2026. In the first two months of the year, 736 employers filed for proposed redundancies, putting 56,396 jobs at risk – an 8.65% increase compared to the same period in 2025. Projections suggest 2026 could see as many as 327,227 redundancies, a 3.7% increase from 2025. The number of HR1 advance notice of redundancy forms issued in February 2026 (430) is almost identical to February 2009 (433), a period shortly before the peak of the 2008-2009 recession.
What this means for you
The current jobs market presents a mixed picture, but with clear challenges for many. Here's a practical guide to navigating the shifts:
What changed and by how much
- Real Pay Growth: Your regular pay is likely only just keeping pace with inflation, with real growth at 0.1% in the three months to May 2026.
- Job Opportunities: There are fewer job vacancies, down by 7,000 to 712,000 in April to June 2026, almost half the 2022 peak.
- Redundancy Risk: The number of jobs at risk from redundancy is rising, with 56,396 jobs flagged in the first two months of 2026 alone.
- Private Sector Pay: If you work in the private sector, your regular pay growth of 2.9% is significantly lower than the public sector's 5.5%, and the weakest since 2020.
Scenario: If you have X this means Y
- If you are a private sector employee: Your wages are likely growing at a slower rate (2.9%) than public sector peers, meaning your household finances may feel a tighter squeeze as costs continue to rise.
- If you are actively looking for a new job: You face increased competition for fewer available roles, with vacancies almost halved since 2022. This may mean your job search takes longer or requires you to broaden your criteria.
- If you have received a redundancy warning: You are part of a significant and growing trend, with 2026 forecast to see a 3.7% increase in redundancies from 2025. It's crucial to act quickly to understand your rights and options.
- If you are an employer considering hiring: The market shows a slight easing of wage pressures in the private sector, but a cautious approach to hiring is evident across the economy, with payrolled employees falling by 85,000 over the last year.
Step-by-step what to do right now
- Review your finances: With real pay growth so low, it may be worth reviewing your budget, identifying areas to save, and ensuring you have an emergency fund.
- Assess your skills: In a tighter job market, consider upskilling or reskilling to make yourself more competitive. Look at in-demand sectors or roles.
- Update your CV and network: Even if not actively looking, having an up-to-date CV and maintaining professional connections can be beneficial if circumstances change.
- Understand your redundancy rights: If you are at risk, familiarise yourself with statutory redundancy pay, notice periods, and support available.
When effective
These figures are current, reflecting the labour market situation primarily from March to May 2026, with some early estimates for June 2026. The trends outlined are ongoing.
Where to get help
For career advice and job search support, government services like Jobcentre Plus can provide guidance. Organisations like Citizens Advice offer free, independent advice on employment rights and financial matters. For those facing redundancy, ACAS (Advisory, Conciliation and Arbitration Service) provides information and advice on employment law.
The Other Side: Glimmers of Resilience?
While the overall picture is challenging, there are some points that suggest a degree of resilience. The unemployment rate, at 4.9%, did fall slightly on the latest quarter and came in below economists' forecasts of 5%. Economic inactivity also saw a marginal decrease. The Bank of England's Monetary Policy Committee voted to maintain the Bank Rate at 3.75% in April 2026, suggesting a degree of stability in monetary policy, though they continue to monitor economic indicators closely.
Why this matters
The state of the jobs market directly impacts every household in the UK. Stagnant real wages mean less disposable income, affecting living standards and the ability to save. Rising redundancies create insecurity and financial hardship for thousands of families, while fewer job vacancies mean less opportunity for career progression and economic mobility.
What happens next
All eyes will be on Prime Minister Burnham's government to see how they address these labour market challenges. Future ONS releases will provide updated figures on employment, wages, and redundancies, offering further insight into whether these trends continue or if new policies begin to shift the landscape. The Bank of England will also continue to monitor these figures as part of its ongoing assessment of the UK economy and future interest rate decisions.
Sources
- Office for National Statistics (ONS) — UK Labour Market Overview, March to May 2026 data, May 2026 payrolled employees, June 2026 early estimates, April to June 2026 vacancies.
- Bank of England (BoE) — Monetary Policy Committee meeting minutes, April 29, 2026.