The UK's jobs market remains on shaky ground as Prime Minister Burnham takes office, with official figures from the Office for National Statistics (ONS) painting a picture of rising unemployment, stagnant real wages, and fewer job opportunities. For many, this means a tighter squeeze on household finances and increased job insecurity.
What Changed and By How Much?
The latest ONS Labour Market Overview for March to May 2026 reveals a difficult landscape:
- Unemployment on the Rise: The UK unemployment rate for people aged 16 and over stood at 4.9%. This is up 0.2 percentage points on the year and follows a peak of 5.0% in January to March 2026, which was the highest level in five years. This translates to 1.81 million people aged 16 and over actively looking for work.
- Employment Holds Steady, Barely: The employment rate for those aged 16 to 64 years was estimated at 75.1%. While up 0.1 percentage points on the latest quarter, it's down 0.1 percentage points on the year, indicating a slight contraction in the proportion of people in work.
- Economic Inactivity Remains High: The economic inactivity rate for people aged 16 to 64 years was 20.9%, representing 9.14 million individuals. A significant concern here is that over 1 in 5 working-age adults are out of work and not looking, with long-term health issues now affecting 2.8 million people – 800,000 more than in 2019.
- Fewer Payrolled Employees: Provisional figures for June 2026 show payrolled employees decreased by 71,000 (0.2%) on the year, settling at 30.3 million. This suggests businesses are being cautious about hiring.
- Vacancies Plummet: The number of job vacancies continues to fall, reaching 712,000 in April to June 2026. This is a significant drop of 54% from the mid-2022 peak of 1.3 million and represents the lowest level since February to April 2021.
- Real Wages Stagnate: Annual growth in employees' average regular earnings (excluding bonuses) was 3.4% in March to May 2026. However, when adjusted for inflation (CPIH), real terms regular pay growth was a meagre 0.1%. This means, for the vast majority, their pay packets are barely keeping pace with the rising cost of living. Private sector regular earnings growth was even lower at 2.9%.
- Redundancies Increasing: The ILO redundancy rate was 3.8 per 1,000 employees in February to April 2026. Worryingly, 2026 is predicted to see around 327,000 redundancies, an increase of 11,622 from 2025.
The Other Side: A Note of Caution
"Caution should be taken when drawing conclusions from short-term changes, and we advise users to focus on long term movements in the data."
The ONS itself advises against over-interpreting short-term fluctuations. While the overall trend points to a weakening market, individual months can see minor shifts. However, the consistent decline in vacancies and the rise in unemployment over the past year suggest a more entrenched challenge.
What this means for you
With real wages barely growing and job opportunities shrinking, many households will find it harder to manage their budgets and improve their living standards. For those seeking work, competition is increasing, while existing employees may face greater job insecurity and limited pay rises.
Scenario: If you have X this means Y
- If you are a job seeker: With vacancies down 54% from their peak and unemployment rising, finding a new role may take longer and require more applications. You're competing in a tougher market.
- If you are currently employed: Your regular pay is likely only just keeping pace with inflation (0.1% real growth). This means your purchasing power is largely stagnant, making it harder to save or absorb unexpected costs. The risk of redundancy is also higher than last year.
- If you are a business owner: While a larger pool of unemployed individuals might suggest easier recruitment, the overall economic uncertainty and falling payrolled employees indicate a cautious market. You might face pressure to manage costs while also retaining key talent, especially with private sector wage growth lagging.
Step-by-step what to do right now
Given the current climate, proactive steps can help both individuals and businesses navigate the challenges:
- For Job Seekers:
- Update your CV and skills: Ensure your CV highlights in-demand skills and tailor it for each application. Consider online courses or training to boost your employability.
- Network actively: Many jobs are found through connections. Attend industry events, use LinkedIn, and reach out to contacts.
- Be flexible: Consider roles or sectors you might not have initially, or be open to temporary contracts to gain experience.
- For Employees:
- Review your budget: With real pay growth so low, it's crucial to understand your income and outgoings. Look for areas to save or reduce non-essential spending.
- Focus on performance and skills: Demonstrate your value to your current employer. Seek opportunities for professional development to make yourself indispensable.
- Build an emergency fund: Many advisers recommend having 3-6 months' worth of essential living costs saved in an accessible account, should your employment situation change.
- For Business Owners:
- Review workforce planning: Assess your staffing needs carefully. Focus on efficiency and productivity.
- Invest in employee retention: With a challenging market, retaining skilled staff is vital. Consider non-monetary benefits or development opportunities to keep employees engaged.
- Monitor economic indicators: Stay informed about ONS data and broader economic trends to make informed decisions about investment and hiring.
When Effective
The ONS data discussed reflects the period up to March to May 2026, with some early estimates for June 2026. Therefore, the trends and advice outlined here are effective immediately and reflect the current state of the UK labour market as Prime Minister Burnham's government begins its term.
Where to Get Help
If you're struggling with employment or financial concerns, several organisations offer support:
- Citizens Advice: Offers free, impartial advice on debt, benefits, and employment rights.
- Jobcentre Plus: Provides support for job seekers, including access to job listings, training, and benefits advice.
- ACAS (Advisory, Conciliation and Arbitration Service): Offers advice on workplace rights, rules, and best practice for employees and employers.
- National Careers Service: Provides free careers advice and guidance.
Sources
- Office for National Statistics (ONS) — Labour Market Overview, June 2026 (supporting employment, unemployment, inactivity, payrolled employees, vacancies, average weekly earnings, redundancy data)