The UK unemployment rate remained at 4.9% between March and May
Job vacancies dropped to 712,000 in the three months to May—nearly half 2022 levels—as employers delayed hiring, according to Office for National Statistics data.
20.9% of Brits aged 16-64 are now economically inactive, meaning they aren’t in or looking for work
“Today’s figures expose the scale of the labour market challenge facing the new Prime Minister, as private sector pay falls in real terms and youth unemployment reaches an 11-year high.” says Aman Navani, Senior Research and Policy Analyst Work Foundation at Lancaster University
Pay growth across the economy continues to slow but living standards are coming under renewed pressure for private sector employees. Since October 2025, private sector wages have failed to keep pace with rising prices and average real weekly earnings are £1.75 lower (in constant 2026 prices) than a year earlier.
Work Foundation analysis suggests just one in five businesses are planning inflation-beating pay rises in 2026, indicating cost of living pressures could intensify in the months ahead.
While unemployment has remained unchanged at 4.9%, the labour market is proving particularly unforgiving for young people aged 16 to 24. Youth unemployment now stands at 16.4%, its highest level for 11 years, with around one in six young people seeking work. Young jobseekers face an acute shortage of opportunities, with starter job vacancies down by almost half over the past decade. This shortage is especially significant in the North East and East Midlands, underlining how a young person’s prospects can depend heavily on where they live.
“While the Government is right to focus on making the education system work better, it must also focus on the demand side. Improving education and employment support will only go so far without concerted action to create more good-quality jobs and give young people a clear route into secure and sustainable work.”
