The UK's employment landscape is facing deepening concerns, with fresh official data showing a worrying cooldown in pay growth and joblessness persisting at its highest level in almost five years.
Wage Growth Cools and Unemployment Stagnates
According to the Office for National Statistics (ONS), the growth in average regular earnings dipped to 4.5 per cent for the three months leading to November. This marks a slight decline from the 4.6 per cent recorded in the previous quarter and represents the slowest rate of increase since April 2022. After accounting for inflation using the Consumer Prices Index, real wages saw a modest rise of just 0.9 per cent.
Simultaneously, the UK's unemployment rate held steady at 5.1 per cent over the latest three-month period, maintaining its position as the highest level seen in nearly five years.
Retail and Hospitality Bear the Brunt of Job Losses
The data revealed a sharp contraction in payroll numbers, with an estimated 43,000 fewer employees on company books in December alone. The retail and hospitality industries were identified as the hardest-hit sectors, experiencing the most significant reductions in staff over the past year.
Liz McKeown, ONS Director of Economic Statistics, stated: “The number of employees on payroll has fallen again, with reductions over the last year concentrated in retail and hospitality, and reflecting ongoing weak hiring activity.”
Vacancies Flatline as Sector Pay Diverges
McKeown added that while there was a minor uptick in job vacancies in the latest period, the total number has remained broadly unchanged over the last six months, following a prolonged decline.
The report also highlighted a growing disparity between public and private sector pay. “Wage growth in the private sector has slowed to its lowest rate in five years while public sector wage growth remains elevated,” McKeown noted, explaining this reflects the impact of some public sector pay awards being implemented earlier than in the previous year.
The confluence of slowing wage growth, elevated unemployment, and sustained job losses in consumer-facing industries paints a challenging picture for the UK's labour market as it moves into 2026.
