The UK labour market in mid-2026 reveals a complex picture with falling payrolled employees, stable unemployment rates, and varying economic activity levels.
The UK labour market in mid-2026 presents a nuanced landscape with several key indicators showing both positive and concerning trends. The number of payrolled employees has seen a slight decline, while unemployment rates remain relatively stable. These shifts provide valuable insights into the economic health and workforce dynamics of the nation.
Understanding these trends is crucial for policymakers, businesses, and individuals navigating the economic environment. The data highlights the importance of adapting to changing labour market conditions and the need for strategic planning in response to economic fluctuations.
The State of Employment in the UK
The number of payrolled employees in the UK has experienced a modest decline. Between June 2026 and June 2026, there was a decrease of 78,000 employees, marking a 0.3% reduction. However, the monthly change between May and June 2026 was minimal, with a decrease of just 13,000 employees, or 0.0%.
This data is based on administrative records from HM Revenue and Customs (HMRC).
Looking at the period from April to June 2026, the number of payrolled employees fell by 86,000, or 0.3%, over the year and by 37,000, or 0.1%, over the quarter. The early estimate for July 2026 indicates a further decrease of 94,000 employees, or 0.3%, on the year, but remained largely unchanged on the month, decreasing by 13,000 to 30.3 million. These figures are provisional and subject to revision as more data becomes available.
Employment Rate and Economic Inactivity
The UK employment rate for people aged 16 to 64 years was estimated at 75.1% in April to June 2026. This represents a slight decrease of 0.2 percentage points on the year but an increase of 0.1 percentage points on the latest quarter. The UK unemployment rate for people aged 16 years and over was estimated at 4.9% for the same period, showing an increase of 0.2 percentage points on the year but a decrease of 0.1 percentage points on the latest quarter.
The economic inactivity rate for people aged 16 to 64 years was estimated at 20.9% in April to June 2026, remaining largely unchanged on both the year and the latest quarter. The Claimant Count for July 2026 decreased to an estimated 1.665 million, reflecting a reduction on both the month and the year. This figure is provisional and subject to revisions based on later amendments to administrative records.
Vacancies and Earnings Trends
The estimated number of vacancies in the UK decreased in the latest quarter. Early estimates for May to July 2026 suggest a decrease of 6,000 vacancies, or 0.8%, to 707,000, compared with February to April 2026. This marks a slight decline since the start of the year, with a total decrease of 11,000 vacancies since January to March 2026. Feedback from the Vacancy Survey indicates that some small firms may not be recruiting due to increases in labour costs and other operating expenses.
Annual growth in employees’ average earnings in Great Britain was 3.5% for regular earnings and 4.1% for total earnings in April to June 2026. Public sector annual pay growth continues to be affected by variations in the timing of pay awards this year. Real terms growth, adjusted for inflation, was 0.5% for regular pay and 1.1% for total pay using the Consumer Prices Index including owner occupiers’ housing costs (CPIH). Using the Consumer Prices Index excluding owner occupiers’ housing costs (CPI), real terms growth was 0.7% for regular pay and 1.3% for total pay.
Labour Disputes and Data Considerations
There were an estimated 47,000 working days lost due to labour disputes across the UK in June 2026. The data in this bulletin is derived from business and social surveys, as well as administrative sources. It includes a combination of accredited official statistics, official statistics, and official statistics in development. Users are advised to consider this when utilizing the data.
The Labour Force Survey (LFS) remains the lead measure for data on labour market participation. Workforce jobs (WFJ) primarily use business surveys to measure employee jobs, while HM Revenue and Customs (HMRC) Pay As You Earn (PAYE) Real Time Information (RTI) data come from administrative tax records and cover only payrolled employees. Differences in levels are expected due to varying reference periods and data collection methods.
The LFS offers detailed breakdowns unavailable elsewhere and remains the sole source for unemployment, economic inactivity, and self-employment data. The number of payrolled employees has generally been falling over the last two years, with the latest flash estimate for July 2026 showing a minimal change on the month. Enhancements to the LFS, introduced since January 2026, have improved survey quality and response rates.
