The latest official figures, released by the Office for National Statistics this week, provide a mixed but cautiously encouraging picture for UK workers.
The most positive development is that the employment rate increased slightly during the latest quarter, while unemployment and economic inactivity both fell. The UK employment rate rose by 0.1 percentage points to 75.1% between March and May 2026. Over the same period, unemployment decreased to 4.9%, while economic inactivity fell to 20.9%.
These movements are modest, but they suggest that the labour market may be beginning to stabilise after an extended period of employer caution.
Workers continue to receive real-terms pay growth
Average regular earnings, excluding bonuses, increased by 3.4% in the year to March–May 2026. Total earnings, including bonuses, increased by 4.3%.
After adjusting for inflation using the ONS headline CPIH measure:
- Regular pay increased by 0.3% in real terms
- Total pay increased by 1.1% in real terms
This means average earnings are still rising slightly faster than prices, although the improvement in ordinary weekly pay remains limited.
The figures also reveal a substantial difference between sectors. Regular public-sector pay grew by 5.5%, compared with 2.9% in the private sector. The ONS cautions that the public-sector figure has been affected by the timing of annual pay awards, but it nevertheless indicates stronger recent earnings growth for many NHS and public-service workers.
Separate research published on 21 July found that median employer pay awards remained at 3.3% during the three months to June. The stability of pay settlements suggests employers are continuing to provide measured increases despite economic uncertainty and weaker recruitment demand.
Recruitment conditions remain challenging
The wider position is not yet a strong recovery.
Payrolled employee numbers were approximately 85,000 lower in May 2026 than one year earlier. However, the monthly figure was broadly unchanged, increasing by approximately 3,000 between April and May.
This suggests that the decline in payroll employment may be slowing, but employers remain cautious about creating permanent job positions.
The latest data also indicate that youth employment requires particular attention. Although overall unemployment decreased slightly during the quarter, younger workers continue to face more difficult recruitment conditions and stronger competition for entry-level vacancies.
What this means for UK workers
The latest figures do not show a rapid employment recovery, but they provide several encouraging signals:
- Employment increased during the latest quarter
- Unemployment and economic inactivity both decreased
- Average earnings continued to rise above inflation
- Public-sector pay growth remained comparatively strong
- The annual decline in payrolled employment appears to be moderating
The main concern is that private-sector regular pay growth remains weak and only narrowly ahead of current inflation. Workers may therefore continue to feel pressure from housing, energy, transport and household costs even where their wages have increased.
The Workers Union view
The latest labour market figures suggest stability rather than a decisive recovery.
For UK workers, the continued growth in real earnings is positive, while the small improvement in employment provides some reassurance after months of uncertainty. However, stronger vacancy growth and more sustained private-sector pay increases will be needed before the labour market can be described as genuinely healthy.
The Workers Union will continue monitoring recruitment levels, pay settlements, NHS and public-sector employment, workplace protections, redundancies and health and safety developments.
