Labour Market Overview, UK: March 2026
The latest data show a continued cooling in payrolled employment, but early signs of resilience in vacancies and real wage growth suggest the recruitment market may be approaching a stabilisation phase.
Employment Trends: Payrolled Jobs Slightly Down
Estimates from HM Revenue & Customs (HMRC) show that the number of payrolled employees in the UK fell by 121,000 (0.4%) over the year to December 2025, but rose slightly by 6,000 from November 2025 to December 2025.
Looking at the October to December 2025 period, payrolled employees dropped by 130,000 (0.4%) year-on-year and 46,000 (0.2%) over the quarter. Early data for January 2026 indicate a decrease of 134,000 (0.4%) on the year but a slight monthly increase of 20,000, bringing the total to 30.3 million employees. These figures are provisional and may be revised as more data arrive.
The employment rate for those aged 16–64 was 75.1%, up slightly from the last quarter and above last year’s level. Meanwhile, the unemployment rate increased to 5.2%, and the economic inactivity rate fell to 20.7%.
Vacancies and Hiring: Flattening After Previous Declines
The number of job vacancies has remained broadly stable. Early estimates for December 2025 to February 2026 suggest a small decrease of 6,000 (0.8%), leaving 721,000 vacancies.
Businesses are cautious, focusing more on retaining staff than aggressive expansion. However, demand for skilled roles in healthcare, logistics, and technology continues to be steady.
Pay and Earnings: Real Wages Keep Growing
Annual growth in average earnings in Great Britain was 3.8% for regular pay and 3.9% for total pay in November 2025 to January 2026. Growth was faster in the public sector (5.9%) than in the private sector (3.3%), partly due to early public sector pay settlements.
Adjusted for inflation, real pay increased modestly: 0.4% for regular pay and 0.5% for total pay using CPIH, and slightly higher using CPI at 0.5–0.7%.
Labour Disputes and Claimants
The Claimant Count for January 2026 fell to 1.691 million year-on-year but rose slightly on the month. Around 31,000 working days were lost due to labour disputes, with a significant share in health and social care.
What This Means for Recruiters
The latest figures suggest a cautious hiring market, but one with pockets of opportunity for recruitment agencies. Businesses are being selective with new hires, focusing on retaining existing staff and filling only essential roles.
There remains steady demand for skilled candidates in key sectors, including healthcare, logistics, and technology. Recruiters may find opportunities by:
- Advising clients on workforce retention strategies.
- Positioning candidates for roles in sectors with ongoing demand.
- Using modest real wage growth as a tool to attract and retain talent.
While overall employment is cooling, the combination of stable vacancies and real wage improvements means recruitment agencies can continue to guide clients strategically, focusing on high-value hires and critical skill areas.
Office for National Statistics (ONS), released 19 March 2026, ONS website, statistical bulletin, Labour market overview, UK: March 2026.
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