As of April 2026, we’ve reviewed the latest UK labour market data from the Office for National Statistics (ONS), covering the period from December 2025 to February 2026, with early indicators for March 2026. The figures suggest a labour market that remains relatively stable overall, though with continued signs of softening in hiring demand and pay growth.

These trends are important for our business, helping to guide workforce planning, recruitment strategies and pay decisions. While improvements to the Labour Force Survey (LFS) continue, the ONS advises caution due to some ongoing volatility. As such, we consider these figures alongside other indicators such as PAYE, workforce jobs and the Claimant Count.

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Key Findings

Payrolled Employees

HMRC payroll data indicates a slight decline in the number of employees over the past year. Compared with February 2025, there were 74,000 fewer payrolled employees in February 2026, a decrease of 0.2%. On a monthly basis, numbers dipped marginally by 6,000 between January and February 2026.

Across the December 2025 to February 2026 period, payrolled employment fell by 87,000 (0.3%) compared with the same period last year and was broadly flat on the quarter, down by 9,000 (0.0%).

The early estimate for March 2026 shows a further small monthly reduction of 11,000, while remaining 65,000 lower than a year earlier. Total payrolled employment is estimated at 30.3 million, although this figure is provisional and subject to revision.

Employment and Unemployment

The employment rate for those aged 16 to 64 was estimated at 75.0% in December 2025 to February 2026. This represents a slight fall compared with the previous quarter, but is broadly in line with levels seen a year earlier.

The unemployment rate stood at 4.9%, declining on the quarter but still higher than the same period last year.

Economic inactivity increased slightly to 21.0% over the latest period, though it remains below levels recorded a year ago.

Vacancies and Claimant Count

Vacancy levels have shown a more notable decline in the latest data. Early estimates for January to March 2026 indicate a fall of 29,000 (3.9%), bringing the total to 711,000 — the lowest level recorded since early 2021.

The Claimant Count for March 2026 rose compared with the previous month but was lower than a year ago, standing at 1.694 million. As with other recent figures, this remains provisional and subject to revision.

Earnings Growth

Wage growth has continued to ease. Annual increases were 3.6% for regular pay and 3.8% for total pay in the latest three-month period.

Public sector regular pay growth stood at 5.2%, compared with 3.2% in the private sector. The gap between the two is narrowing as earlier public sector pay timing effects begin to fade.

In real terms, earnings growth remains modest. Using CPIH, regular pay rose by 0.2% and total pay by 0.4%. Using CPI, regular pay increased by 0.4% and total pay by 0.7%.

Labour Disputes

There were an estimated 39,000 working days lost due to labour disputes in February 2026, indicating a relatively low level of industrial action compared with recent peaks.

Overall, the latest figures suggest a labour market that is gradually cooling. Payrolled employment remains slightly down on the year, vacancy levels have fallen to their lowest point in several years, and earnings growth continues to moderate. While employment remains stable, these trends point toward a more cautious hiring environment as we move further into 2026.

Source: Labour market overview, UK – Office for National Statistics