Marvin OnumonuThe Office for National Statistics (ONS) released the latest UK labour market figures for January 2026, showing payrolled employees dropped by 155,000 (0.5%) between November 2024 and November 2025, and fell by 33,000 (0.1%) from October to November 2025.
From September to November 2025, payrolled employees fell by 135,000 (0.4%) compared to last year and by 43,000 (0.1%) over the quarter.
The early estimate for December 2025 showed payrolled employees down 184,000 (0.6%) year-on-year and by 43,000 (0.1%) on the month, reaching 30.2 million.
Employment rate for people aged 16 to 64 was estimated at 75.1% from September to November 2025, showing little change on the quarter and higher than last year.
Unemployment rate for people aged 16 and over was 5.1%, up on both the quarter and year.
Economic inactivity for those aged 16 to 64 was estimated at 20.8%, down on the quarter and below last year’s figure.
Claimant count for December 2025 increased on the month but fell on the year to 1.677 million.
Vacancies for October to December 2025 increased by 10,000 (1.3%) to 734,000 compared with the previous quarter.
Annual employee earnings in Great Britain grew 4.5% for regular pay and 4.7% for total earnings from September to November 2025.
Public sector regular pay growth was 7.9%, private sector 3.6%.
Growth in real terms, adjusted for inflation, was 0.6% for regular pay and 0.8% for total pay using CPIH, and 0.9% and 1.1% respectively using CPI.
November 2025 saw around 155,000 working days lost due to labour disputes, with over half in the health and social work sector due to doctors’ strikes.
REACTION:
Mark Jones, employee benefits partner at Isio:
“Gradual reductions in payrolls are changing the shape of work inside organisations. Fewer people are being asked to carry the same demands, and that pressure is increasingly showing up in absence, disengagement, and burnout.
“This is where many employers risk misreading the moment. Freezing hiring may control costs in the short term, but without action it can quietly undermine productivity and retention.
“We’re seeing the strongest employers shift focus away from headcount growth and towards workforce resilience – actively managing absence, supporting wellbeing, and making sure benefits reflect real employee pressures.
“These decisions are being backed by evidence. HR teams are under intense scrutiny to justify spend, and the organisations that succeed are those using data to show how targeted investment protects performance rather than adds cost.
“Labour market conditions remain fragile. Employers that recognise the human impact of smaller payrolls, and respond early, will be best placed to rebuild when confidence returns.”
James Cockett, senior labour market economist for the CIPD:
“While vacancies have risen slightly, unemployment and redundancies remain stubbornly high, highlighting the pressures that employers are facing in a tough economic environment.
“This is also reflected in the rise in temporary employment, now at its highest level since mid-2023, suggesting that employers are holding back on long-term investment in their workforce in light of ongoing uncertainty and concerns about the increased costs that the Employment Rights Act will bring.
“It’s crucial that the Government continues to consult with employers to ensure that measures still to be finalised in secondary legislation don’t add further cost and complexity to recruitment and discourage permanent job creation.”
Kevin Fitzgerald, UK MD at Employment Hero:
“Creating an environment that actively supports hiring will be crucial to unlocking the full potential of the labour market and driving better outcomes for both employers and workers.
“However, today’s Office for National Statistics (ONS) employment data is that latest demonstration of how growth in the UK labour market continues to stall.
“However, despite the employment rate remaining flat, a further uptick in vacancy numbers, following a small increase last month, is positive.
“Market confidence relies on sustained growth, and this is good news for jobseekers looking to land new opportunities in a competitive market.
“However, rising costs combined with the Employment Rights Bill becoming law last month have placed significant pressure on employers, many of whom have opted to play it safe when it comes to hiring, limiting employment growth.
“A flat employment rate aligns with Employment Hero’s real-time proprietary data, which shows that year-on-year employment growth is slowing among UK small businesses, falling from 7.8% in December 2024 to 2.5% in December 2025.
“Small businesses are the backbone of the economy, and it is clear that more must be done to win back their confidence.”
Petra Tagg, workforce solutions director at ManpowerGroup:
“Today’s Office for National Statistics (ONS) data put unemployment at 5.1%, underscoring a market that is cooling, not stabilising.
“Average earnings are 4.5% (regular) and 4.7% (total). Vacancies stand at 734,000, a 10,000 (1.3%) up move on the quarter.
“The picture remains one of flat, subdued vacancies and selective hiring, as organisations emphasise productivity, cost control and a low risk appetite.
“January may bring more applications, but on current vacancy levels demand for roles is set to outpace the supply of opportunities, so any further shifts in unemployment are likely to be steady rather than sharp.”
“What we’re seeing in the labour market is persistent job hugging: our new ManpowerGroup data shows that 58% of workers plan to stay put even as 60% continue applying elsewhere.
“The caution behind this behaviour is being shaped by a widening confidence gap – technology capability is outpacing worker preparedness.
“While 44% of workers now use AI regularly, confidence in using this tech has fallen by 18 points to 63%, and 57% report having no recent training or mentorship.
“In short, the bridge to the future is being built faster than the road to reach it.
“Employers who make career routes visible and invest in targeted, role relevant training and mentoring will be best placed to turn new tools into real outcomes and unlock productivity as roles evolve.”
