In the quarter to March 2026, unemployment levels fell, but the unemployment rate (5.0%) is up on last month’s figure (4.9%). Employment and economic inactivity both rose, and vacancies declined even further. Regular wage growth also continued to slow, with real-term wage increases affected by recent inflationary pressures linked to the Middle East conflict. As such, UK labour market conditions remain challenging for many businesses, workers and people seeking work.
The UK employment rate (for people aged 16 to 64 years old) was estimated at 75.0% in the period between January 2026 and March 2026, which is slightly up on the quarter but unchanged on the year. The UK unemployment rate (for people aged 16 and over) was estimated at 5.0% in the quarter to March 2026, representing a decrease on the quarter but increase on the year.
The inactivity rate for people aged 16 to 64 years old was estimated at 20.9% in the three months to March 2026, meaning it is up on the quarter but down on the year. The provisional estimate for the number of vacancies in the UK economy in the quarter to April 2026 is 705,000, representing a decrease on the quarter (-28,000) and, to a greater extent, the year (-54,000). This is the lowest level of vacancies recorded since February to April 2021.
Estimates for payrolled employees in the UK fell by 104,000 (-0.3%) between March 2025 and March 2026, and decreased by 28,000 (-0.1%) between February and March 2026. The early estimate of payrolled employees for April 2026 decreased by 210,000 (-0.7%) on the year, and by 100,000 (-0.3%) on the month, to 30.2 million. Figures for April 2026 should be treated as provisional estimates and are likely to be revised when more data is received next month.
Annual growth in employees' average regular earnings (excluding bonuses) in Great Britain was 3.4% in the three months to March 2026, and annual growth in total earnings (including bonuses) was 4.1%. Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH)), for regular pay and total pay stood at 0.1% and 0.8%, respectively, across the same period.
Despite promising signs of economic growth emerging in recent GDP figures, this month’s data indicates that UK labour market conditions continue to be challenging, and businesses remain cautious about hiring. Some new trends are also emerging, including vacancies and real-term wages falling further, alongside rising economic inactivity.
Fortunately, there are policy levers available to government which can help grow the economy and support more people into work. For example, working with businesses to find a more workable landing zone for the Employment Rights Act through current and expected consultations on secondary regulation. Unlocking apprenticeship opportunities will also require increases in apprenticeship funding bands to reflect the rising cost of delivery.
