In the quarter to June 2026, employment rose, headline unemployment fell and economic inactivity was broadly unchanged. Meanwhile, youth unemployment remained above 16%, vacancies fell again, and regular pay growth showed signs of resilience.
This month’s labour market data reinforces the ‘low hire, low fire’ pattern seen in recent months, with many businesses continuing to prioritise workforce retention over creating new roles. As a result, those outside the labour market continue to bear the brunt of a weaker hiring environment and ongoing employer caution. This includes many young people who are already looking for work, as well as recent education and training leavers.
The UK employment rate (for people aged 16 to 64 years old) was estimated at 75.1% in the quarter to June 2026, which is slightly up on the quarter but down on the year. The UK unemployment rate (for people aged 16 and over) was estimated at 4.9% over the same period, representing a fall on the quarter and a rise on the year.
The inactivity rate for people aged 16 to 64 was estimated at 20.9% in the three months to June 2026 and is unchanged on the quarter and the year. Early estimates for the number of UK vacancies in the quarter to July 2026 predict another decrease of 6,000 (-0.8%) to 707,000.
Estimates for payrolled employees in the UK fell by 78,000 (-0.3%) between June 2025 and June 2026. However, it was largely unchanged on the month, decreasing by 13,000 (0.0%) between May and June 2026. This is based on administrative data from HM Revenue and Customs (HMRC). The early estimate of payrolled employees for July 2026 decreased by 94,000 (-0.3%) on the year, but was largely unchanged on the month, decreasing by 13,000 (0.0%) to 30.3 million. Figures for July should be treated as provisional estimates and are likely to be revised when more data are received next month
Annual growth in employees' average regular earnings (excluding bonuses) in Great Britain was 3.5% in the three months to June 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 0.5% and 1.1%, respectively, across the same period.
Following the recent announcement that the cost of the Employment Rights Act (ERA) to businesses is expected to be significantly higher than initially forecast, it is vital that government works with employers to reduce business costs and strengthen firms' capacity to create jobs and invest in skills. This should include resuming tripartite dialogue on the ERA and identifying measures ahead of the Autumn Budget to ease employment, energy and business rates costs, which remain among the most significant cost pressures facing employers.
