Office for National Statistics figures released on Thursday showed vacancies falling by 0.8% to 721,000 in the three months to February 2026, while unemployment held at 5.2% in the three months to January.
The number of workforce jobs was down by 266,000 compared with a year earlier, driven largely by a 242,000 fall in self-employment jobs. There are now 2.6 unemployed people for every vacancy, up from 2.5 in the previous quarter and well above the 1.9 recorded a year earlier.
At first glance, it is a picture of a labour market that has stalled rather than cracked. Liz McKeown, economics statistics director at the ONS, put it plainly: “The number of workers on payroll rose slightly in the latest month but, overall, the recent picture has been broadly flat.”
That flatness, though, is proving difficult to interpret as benign. Employers, economists, and people specialists are all looking at the same numbers and seeing a market under growing pressure from a different angle. For some, the concern is the immediate cost of hiring. For others, it is the longer-term damage being done to younger workers, entry-level recruitment, and the broader talent pipeline.
CIPD senior labour market economist James Cockett warned that the sharpest impact is being felt by younger people trying to get started. “Unemployment among 18-24-year-olds, has hit its highest rate since 2015 as the jobs market becomes increasingly challenging for young people. Nearly 600,000 18–24-year-olds are out of work but looking for work, a huge waste of their potential.”
That matters not only because of the scale of youth unemployment, but because the pressure is colliding with policy changes that alter the cost equation for employers. Cockett pointed to the coming rise in minimum wage rates for younger workers, while also welcoming new government incentives aimed at supporting entry-level jobs and apprenticeships. “While these are positive steps towards tacking youth unemployment, today’s ONS figures still paint a dismal picture of the current challenges, highlighting the need not just for more entry level jobs but a firm foundation of training and skills development.”
Business leaders responding to the figures were clear that confidence is being squeezed from several directions at once. FDM Group COO Sheila Flavell said: “Businesses continue to be squeezed by economic volatility, from tax changes to sick pay alterations and high interest rates, restricting confidence in hiring, which has contributed to the job market slide.”
She added that the graduate market is proving especially exposed. “Worryingly, it’s the graduate market that feels hiring slumps the hardest, particularly during the era of AI. Companies are either not hiring or pivoting to skilled workers who can instantly drive growth.”
That thread ran through several responses. Helm chief executive Andreas Adamides said: “It’s hardly surprising wage growth has stalled and unemployment isn’t coming down. Businesses are being squeezed by rising costs and higher taxes, while the rapid shift toward AI is further discouraging employers.” His conclusion was direct: “If the Government is serious about backing British workers, it should start by backing British businesses, cutting costs, and investing in AI skills. Get these right, and the wage growth and jobs will follow.”
For smaller employers, the tension looks slightly different. Employment Hero UK managing director Kevin Fitzgerald said the latest data “underlines the importance of giving them the certainty and flexibility needed to support job creation.” He argued that operating costs have risen sharply in recent weeks, while wage pressure has remained intense. “Our platform data shows wage growth in UK SMEs reached 8.8% year-on-year in February, up sharply from 5.6% in January.”
Fitzgerald also pointed to the impact of employment reform. “This pressure has been compounded by the incoming Employment Rights Act reform. Measures such as day-one rights and stricter rules around predictable working are already beginning to shift hiring behaviour. For many small businesses, the increased risk and administrative burden associated with hiring – especially flexible or part-time roles – may lead to slower job creation.”
That warning on youth employment was echoed by the Institute for Employment Studies. Its chief executive, Naomi Clayton, said: “Unemployment remains at a five-year high as more people are looking for work. Payrolled employment continues to fall in retail and hospitality, alongside other parts of the private sector, while real pay growth is slowing. Youth unemployment is at its highest rate in 10 years and continues to rise among 18-24-year-olds.”
The result is a labour market that is not collapsing, but is becoming more selective, more expensive, and more difficult to enter. Vacancies have remained broadly flat for nearly a year. Employers are still hiring, but more cautiously. Young people are still looking for work, but facing fewer openings and tougher expectations. Businesses are still talking about growth, but increasingly through the lens of cost control, automation, and immediate return.
That is what makes the latest ONS release more than a snapshot of inertia. The market may be flat on the surface. Beneath it, pressure is building in ways that could shape hiring for much longer.
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