Labour Market Overview, UK: June 2026
The latest figures show a continued cooling in employment, with vacancies falling to their lowest level in more than four years. While some labour market indicators remain relatively stable, employers continue to take a cautious approach to hiring.
Employment Trends: Payroll Numbers Continue to Decline
Estimates from HM Revenue & Customs (HMRC) show that the number of payrolled employees in the UK fell by 138,000 (0.5%) over the year to April 2026, with a monthly decline of 53,000 (0.2%) between March and April.
Looking at the February to April 2026 period, payrolled employment fell by 103,000 (0.3%) year-on-year and by 31,000 (0.1%) over the quarter.
Early estimates for May 2026 suggest the pace of decline may be easing. Payroll employment was down 119,000 (0.4%) on the year but was broadly unchanged on the month, increasing by just 2,000 to 30.3 million employees. As with previous releases, these figures remain provisional and may be revised.
The employment rate for those aged 16–64 remained at 75.0%, unchanged both quarterly and annually. The unemployment rate fell slightly to 4.9%, while economic inactivity edged up to 21.0%.
Vacancies and Hiring: Lowest Vacancy Level Since 2021
The number of job vacancies continued to decline during the latest quarter. Early estimates for March to May 2026 show vacancies falling by 19,000 (2.6%) to 707,000.
This represents the lowest vacancy level since early 2021 and highlights the ongoing caution among employers. Many organisations remain focused on controlling costs and improving productivity rather than expanding headcount.
Despite the overall slowdown, recruiters continue to report demand in specialist sectors including healthcare, engineering, technology and logistics.
Pay and Earnings: Wage Growth Remains Positive
Annual growth in average earnings remained relatively steady, with regular pay increasing by 3.4% and total pay rising by 4.4% in February to April 2026.
Public sector earnings growth reached 5.1%, compared with 2.9% in the private sector, although the timing of public sector pay awards continues to influence comparisons.
After inflation, wage growth remains modest. Using CPIH, real earnings increased by 0.1% for regular pay and 1.2% for total pay, supported by bonus payments.
Labour Disputes and Claimants
The Claimant Count increased to 1.712 million, rising both on the month and the year. Meanwhile, around 120,000 working days were lost because of labour disputes in April 2026, with the majority linked to industrial action in the health and social care sector.
What This Means for Recruiters
The latest figures suggest the labour market remains challenging but not deteriorating rapidly. While vacancies continue to fall, payroll employment appears to be stabilising, and wage growth remains positive.
Key Opportunities for Recruitment Agencies
- Focus on specialist and skills-short sectors where hiring demand remains resilient.
- Help employers develop targeted hiring and workforce planning strategies.
- Support clients with candidate retention and employee engagement initiatives.
- Use continued real wage growth as a tool to attract and secure talent.
While hiring volumes remain below recent highs, opportunities still exist for recruiters who can provide market insight, sector expertise and access to hard-to-find candidates.
Office for National Statistics (ONS), released 18 June 2026, ONS website, statistical bulletin, Labour market overview, UK: June 2026
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