Official UK job market data shows private sector employment fell by 26,000 last month and is down 145,000 over the past year, with job vacancies dropping to a five-year low of around 8,000 fewer than in the same period in 2025. Private sector wages grew at just 2.9%, barely outpacing inflation. In contrast, public sector employment increased by 11,000 and annual wage growth rose to 6.6%. The article attributes these trends partly to Labour's policies on national insurance and the minimum wage, which are impacting small businesses' hiring decisions.
Written by the local model on 2026-09-15,
using this article's own text rather than the other coverage of the
same event (that is the story summary below).
Story summary
Job vacancies in the UK dropped to their lowest point since spring 2021 or earlier in the pre-pandemic period according to ONS data for the three months ending August, falling by around 8,000 to 702,000. This decline is attributed to small firms holding back on hiring due to soaring wage costs. Regular weekly earnings growth remained steady at 3.5%, but with inflation considerations, wages rose only 0.8%. The unemployment rate stayed constant at 4.9% for the three months ending July, though more timely data showed a decline of 26,000 workers in August payrolls to 30.2 million, following a drop of 19,000 in July.
Private sector jobs and vacancies are contracting while public sector employment is booming; the latter added an additional 11,000 jobs by June, employing over 6.21 million people. In contrast, private sector regular wage growth was just 2.9%, barely outpacing inflation. Economic experts link this trend to Labour's increases in employer national insurance and the minimum wage, which are reported to impact small businesses' hiring decisions more severely than larger corporations.
Written for “UK Job Market Trends” on 2026-09-17,
grounded in this article and the 1 other(s) covering the same event.
Why this leaning score
The model judged this article politically coded and scored it -0.45, but every quote it verified points right, so the score is not published.
Written under an earlier scoring contract, which gave a paragraph
rather than checkable quotes. Re-analysing this article replaces it.
Leaning score withheld for article 10436: score contradicts its own evidence · logged 2026-09-15
- See more Daily Mail on Google - save us as a Preferred Source
More warning lights are flashing on Britain's jobs market today as Andy Burnham braces for a winter of discontent.
Official figures showed numbers on company payrolls fell by 26,000 last month, and are now down 145,000 over the past year.
asserted
numbers → see → year
Job vacancies tumbled to a fresh five-year low in the three months to August, with around 8,000 fewer advertised compared to the same period in 2025.
asserted
8,000 → tumble → 2025
Meanwhile, private sector regular wage growth was 2.9 per cent - barely keeping ahead of inflation.
asserted
growth → keep → inflation
However, the picture is different in the public sector, where annual pay rises accelerated to 6.6 per cent.
asserted
rises → accelerate → cent
The state also added another 11,000 jobs in the three months to June, employing 6.21million people.
asserted
state → add → people
Liz McKeown, director of economic statistics at the ONS, pointed to the effects of Labour's increases to employer national insurance and the minimum wage.
asserted
McKeown → point → insurance
She said: 'Smaller businesses are continuing to report that increased labour costs are affecting hiring decisions.'
The bleak picture emerged as the Middle East crisis looks to be deepening, with fears of a new wave of inflation from surging energy prices.
asserted
crisis → say → prices
Up to five Bank of England interest rate hikes are being priced in by markets before the end of the year.
asserted
hikes → price → year
Andy Burnham and Chancellor John Healey are already struggling to balance the books at the Budget next month, with businesses warning more tax increases could be a disaster.
uncertain
increases → struggle → Budget
Andy Burnham and Chancellor John Healey (left) are already struggling to balance the books at the Budget next month, with businesses warning more tax increases could be a disaster
The rate of unemployment in the UK held at 4.9 per cent between May and July, the ONS said.
uncertain
ONS → struggle → May
Among younger workers, aged 18-24, unemployment has risen from 11.9 per cent to 14.4 per cent over the same period.
asserted
unemployment → age → period
Shadow Chancellor Andrew Griffith said: 'Labour is, and always has been, the party of unemployment.
'
asserted
Labour → say → unemployment
Businesses are still absorbing the cost of Angela Rayner's disastrous (Un)Employment Rights Act, and Labour's refusal to rule out more tax rises is causing huge uncertainty for employers.
'
asserted
refusal → absorb → employers
Only the Conservatives have a plan to get Britain working again.
asserted
Britain → have → plan
We'll cut the red tape that makes it harder for employers to hire and deliver the lower, simpler taxes our country needs.'
The UK's labour market has been shrinking for the past two years, recording rising unemployment while fewer employers are hiring, as 16,000 fewer job vacancies were advertised since the start of the year.
asserted
vacancies → cut → year
The Bank of England is expected to keep borrowing costs unchanged at 3.75 per cent tomorrow.
asserted
Bank → expect → cent
The decision will come after official inflation figures are released, with analysts pencilling in an increase from 2.9 per cent to 3.1 per cent.
But fears are mounting that could just be the start of a new surge in prices, with energy costs at eye-watering levels.
uncertain
that → come → levels
The Middle East crisis looks to be escalating again, with Bloomberg Economics estimating that the energy price cap might go up 25 per cent in January.
uncertain
cap → look → January
That scenario could push headline CPI inflation to 4 per cent next year, with markets betting on multiple interest rate rises this year as the BoE tries to rein in pressures.
Chris Beauchamp, Chief Market Analyst at investing and trading platform IG, said: 'Earnings growth is slowing, while the fall in payrolls means the economy has lost nearly 150,000 jobs in a year.
'As we look ahead to more weeks of high energy prices, it seems increasingly likely that the BoE will have to move on rates even with the weaker employment situation continuing.'
Thomas Pugh, chief economist at RSM UK, said: 'The Monetary Policy Committee (MPC) has so far relied on the weakness of the labour market as cover for keeping rates on hold, but that position looks increasingly difficult to hold if the labour market stabilises and inflation rises to around 4 per cent.
'
uncertain
inflation → push → cent
We still expect the MPC to hold rates on Thursday, but a rate hike as early as November is now looking much more likely.'
asserted
hike → expect → November
Julia Diniz, an economist at the Resolution Foundation think-tank, said: 'The big winners from today's ONS data are pensioners, who are set for another large rise in the state pension next spring thanks to the triple lock.
'
asserted
who → say → lock
The biggest losers are workers in the private sector who are already earning less than they were last autumn.
asserted
they → earn → less
With wage growth slumping to its lowest rate in nearly six years, the UK's private sector pay squeeze will tighten over the coming months as inflation rises.
asserted
inflation → slump → months
'With unemployment settling at around five per cent and the number of job vacancies continuing to fall, conditions are also tough for those looking for work, especially young people.
asserted
conditions → settle → work
Work and Pensions Secretary Pat McFadden said the ONS figures 'show a labour market that remains resilient in the face of significant global economic pressures'.
asserted
that → say → pressures
'But we know there is more work to do, particularly to ensure young people gain the skills, experience and confidence needed to succeed,' he added.
asserted
he → know → skills
The Aporia
