Full Breakdown
UK Wage Growth Slows as Job Vacancies Hit Five-Year Low
8/18/2026, 8:19:20 PM
Core Event: Slower Pay and Falling Vacancies
The Office for National Statistics (ONS) reported that average total-earnings growth, including bonuses, fell to 4.1 % in the three months to June, down from 4.3 % the month before. Regular earnings growth (excluding bonuses) edged up to 3.5 %, while private-sector pay growth slipped to 2.8 %, the weakest rate since October 2020. Public-sector earnings rose 6.1 %, driven by recent NHS pay awards.
Vacancies declined to 707,000, the lowest level in more than five years, and payroll headcount fell by 13,000 in June and a further 13,000 in July. The headline unemployment rate held steady at 4.9 %.
Background & Context: Energy Shock and Policy Pressures
Higher energy costs linked to the Iran war have amplified inflationary pressures, prompting the ONS to note a “fresh hit to living standards.” Small firms cite rising labour and operating costs, including higher National Insurance contributions and the minimum wage, as reasons for scaling back recruitment.
Data & Statistics
| Metric | Figure (three months to June) | Trend |
|---|---|---|
| Total-earnings growth (incl. bonuses) | 4.1 % | ? from 4.3 % |
| Regular earnings growth (excl. bonuses) | 3.5 % | ? from 3.4 % |
| Private-sector pay growth | 2.8 % | ?, six-year low |
| Public-sector pay growth | 6.1 % | ?, NHS awards |
| Job vacancies | 707,000 | ?, five-year low |
| Unemployment rate | 4.9 % | <-> |
| Payroll headcount change | –13,000 (June) –13,000 (July) | ? |
Official Statements & Responses
She added that private-sector pay growth continues to ease, whereas public-sector growth stays elevated because of the timing of NHS awards.
He outlined government measures to overhaul the benefits system, introduce a youth-jobs grant, and support small businesses through policy adjustments.
The new prime minister announced “breathing-space” measures in the first week of office, aimed at easing the cost of living and tackling youth unemployment, while a review of youth jobs led by former Labour minister Alan Milburn is slated for release in the autumn.
Verbatim Quotes
- “The persistent slide in vacancies is a red flag for the jobs market, suggesting labour demand is shrinking amid soaring employment and energy costs, while greater automation is also squeezing some entry-level roles.” — Ben Harrison, director at Work Foundation, Lancaster University
- “On the face of it, the latest labour market report looks relatively benign. Unemployment, employment and inactivity remain broadly stable, while vacancies edged down but are essentially levelling off. The jobs market remains soft, but it isn’t collapsing.” — Jake Finney, senior economist at PwC UK
What’s Next
The government awaits the autumn-time youth-jobs review from Alan Milburn, which will recommend measures such as expanded internships for young people with special educational needs and new requirements for primary schools to identify at-risk students. Economists note the softer labour market could reduce pressure on the Bank of England’s interest-rate decisions, and the upcoming Autumn Budget is expected to address business-confidence measures, including proposals to ease National Insurance contributions for employers hiring under-25s.
