ONS Labour Market Overview - March 2026
As of March 2026, we’ve reviewed the latest UK labour market release from the Office for National Statistics (ONS), covering the period from November 2025 to January 2026, with early indicators for February 2026. The data points to a labour market that remains relatively stable overall, though with signs of softening in employment and hiring demand.
These insights are important for our business, helping to inform workforce planning, recruitment strategies and pay decisions. While improvements to the Labour Force Survey (LFS) continue to enhance data quality, the ONS advises caution due to ongoing volatility. As such, we consider these figures alongside other indicators such as PAYE, workforce jobs and the Claimant Count.
Key Findings
Payrolled Employees
HMRC payroll data shows that the number of payrolled employees declined by 96,000 (0.3%) between January 2025 and January 2026. However, on a monthly basis, there was a slight increase of 6,000 between December 2025 and January 2026.
Looking at the November 2025 to January 2026 period, payrolled employment was down by 109,000 (0.4%) compared with the same period last year and fell by 31,000 (0.1%) on the quarter.
The early estimate for February 2026 suggests payrolled employment rose by 20,000 (0.1%) on the month, although it remains 49,000 (0.2%) lower than a year earlier, bringing the total to 30.3 million. This figure is provisional and may be revised in future releases.
Employment and Unemployment
The employment rate for people aged 16 to 64 was estimated at 75.1% in November 2025 to January 2026. This represents an increase on the previous quarter and is higher than levels seen a year ago.
Unemployment stood at 5.2%, continuing its gradual upward trend both on the quarter and annually.
Economic inactivity fell to 20.7%, indicating that fewer people are out of work and not seeking employment compared with earlier periods.
Vacancies and Claimant Count
Vacancy levels have remained broadly stable but showed a slight decline in the most recent data. Estimates for December 2025 to February 2026 indicate a reduction of 6,000 (0.8%), bringing total vacancies to 721,000.
The Claimant Count for February 2026 rose compared with the previous month but was lower than a year ago, standing at 1.692 million. As with other early estimates, this figure is subject to revision.
Workforce Jobs and Public Sector Employment
The total number of workforce jobs was estimated at 36.6 million in December 2025, an increase of 33,000 (0.1%) on the quarter. This was driven by growth in employee jobs, while self-employment declined.
On an annual basis, total workforce jobs fell by 266,000 (0.7%), largely due to a significant drop in self-employment.
Public sector employment increased slightly to 6.19 million, rising by 6,000 on the quarter and by 43,000 compared with the previous year.
Earnings Growth
Growth in average earnings continued to ease. Annual increases were 3.8% for regular pay and 3.9% for total pay in the latest three-month period.
Public sector pay growth remained higher at 5.9%, compared with 3.3% in the private sector, although this is partly influenced by earlier pay settlements in 2025.
After adjusting for inflation, real pay growth was modest. Using CPIH, regular pay rose by 0.4% and total pay by 0.5%. Using CPI, regular pay increased by 0.5% and total pay by 0.7%.
Labour Disputes
There were an estimated 31,000 working days lost due to labour disputes in January 2026, indicating a lower level of industrial action compared with previous months.
Overall, the UK labour market remains relatively resilient but continues to show signs of gradual cooling. Payroll employment is slightly down on the year, unemployment has edged higher, and vacancies have softened. Earnings growth is moderating, with only modest real-terms gains, while industrial action has eased. Together, these trends point to a more balanced labour market as we move further into 2026.
Source: Labour market overview, UK – Office for National Statistics
