Weak recruitment and declining movement between jobs are creating increasingly serious problems for Britain’s labour market, with younger workers bearing a disproportionate share of the consequences, according to Bank of England deputy governor Clare Lombardelli.
Speaking at the Bank Watchers Conference on 10 November, Lombardelli warned that businesses were responding to economic uncertainty primarily by restricting recruitment rather than making employees redundant.
The result is a labour market in which existing workers retain relatively strong employment security while people seeking their first job, changing employers, or pursuing a different career encounter fewer opportunities.
The Bank of England estimates that workers aged 16 to 24, despite accounting for approximately 12.5% of the labour force, have represented more than half the increase in overall unemployment since mid-2022.
The youth unemployment rate is now more than three times the national rate, while nearly one million young people are not in education, employment, or training.
Lombardelli said the difficulties reflected a combination of weak recruitment, the higher costs and perceived risks of hiring inexperienced workers, and a longer-term reduction in labour mobility.
Vacancies have fallen approximately 14% below their pre-pandemic level across the economy. However, the reduction reaches 19% in accommodation and food services and 46% in retail, two industries traditionally providing substantial numbers of entry-level jobs.
Fewer opportunities to change jobs —
The decline extends beyond recruitment into the movement of people already in employment.
Almost three million workers changed jobs during 2025, but the proportion switching directly between employers has fallen substantially over the longer term.
Thirty years ago, more than 3% of employed people changed jobs each quarter. During the past year, the equivalent figure has remained only slightly above 2%.
Workers who change jobs are also less likely to move into different industries or occupations requiring different levels of skill.
In the early 2000s, more than half of job changes involved moving between industries. That proportion subsequently declined by approximately ten percentage points during the financial crisis and has not recovered.
These developments can affect business performance as well as individual careers. Companies expanding into new markets or introducing different technology depend on their ability to recruit experienced people from elsewhere in the economy.
When employees move less frequently, businesses can find it harder to attract relevant skills, while workers have fewer opportunities to progress into positions where their experience is more productive.
Lombardelli also highlighted the lasting consequences of young people struggling to enter employment. Delayed access to work can restrict the accumulation of skills, experience, and earnings over the course of a career.
Employers facing uncertain demand may be particularly reluctant to recruit inexperienced workers because of the training and supervision required, even while retaining existing employees.
That caution has been reinforced by higher operating costs and memories of labour shortages following the pandemic, when businesses experienced significant difficulties recruiting and retaining staff.
Productivity and inflation concerns —
The Bank believes reduced labour mobility could weaken productivity because workers are less able to move towards organisations and occupations where their skills would be most effectively used.
It could also complicate the relationship between unemployment and wage growth.
When people seeking work are poorly matched to available vacancies, an increase in unemployment may provide less downward pressure on wages than would normally be expected.
Underlying wage growth remains at the upper end of the range the Bank considers consistent with its inflation target, despite signs of weaker recruitment demand.
Artificial intelligence could introduce further changes by reducing demand for some existing tasks while creating opportunities requiring different capabilities.
Lombardelli cautioned that the benefits of technological change would depend partly on whether workers could move into emerging roles and acquire the skills needed to perform them.
The Bank will therefore continue examining recruitment, job mobility, and wage pressures alongside headline unemployment figures when assessing labour market conditions and the outlook for monetary policy.
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