UK Labour Market: August 2026 + reaction

UK Labour Market: August 2026

Secretary of State for Work and Pensions, Pat McFadden said: 

It's encouraging to see signs of progress in the latest figures, with employment on the up and a continued fall in unemployment rate. 

We've already put in places reforms to get Britain working again. We've rebalanced Universal Credit to remove barriers that held people back from employment, and we're investing £3.5 billion in tailored employment support to help people with health conditions and disabilities move into work. We're also supporting businesses to hire young people through our Youth Jobs Grant. 

We will continue to reform welfare and employment support so that more people can live independently and restore opportunity across the country. 

Background: 

• The employment rate is up 0.1 percentage points on the quarter to 75.1%. 

• The unemployment rate (4.9%) is down on the quarter by 0.1 percentage points. 

• The economic inactivity rate is 20.9% unchanged on the quarter. 

• The UK is the fastest growing economy in the G7 so far this year and last year, we were the fastest growing European G7 economy. 

• The UK has the 3rd highest employment rate in the G7. 

• The IMF have forecast that the UK will be the fastest-growing G7 economy in Europe this year and next year 

• Since the election, the Bank of England have cut interest rates six times.  

• Since the start of this parliament, real wages have grown every month and have already grown faster than they did over the first decade of the previous government. 

• Businesses can access the new Youth Jobs Grant, which will pay £3,000 for every eligible young person they hire helping thousands more young people take their first step on the career ladder. Funding for businesses who give youngsters a chance as Government ramps up youth jobs drive - GOV.UK 

• Thousands of young people across Great Britain will benefit from access to expanded employment and wrap-around support services as the locations of almost 180 new Youth Hubs are confirmed. Almost 180 more Youth Hubs to help young people build skills and find jobs - GOV.UK 

• Former Health Secretary Alan Milburn is leading a report into the rising number of NEETs and will consider health, skills, employment, and welfare systems. Mr Milburn's interim report published on 28 May warned that the first rung of the career ladder has thinned 

British Chambers of Commerce

Reacting to the latest labour market data from the ONS,Patrick Milnes,HeadofPolicy for People and Workat the British Chambers ofCommerce,said:  

Although unemployment has held steady at 4.9%, this cannot hide the wider problems bedeviling the UK's jobs market.  

Business confidence is at a post-Pandemic low and the squeeze on firms' finances shows no signs of easing.  

With last week's announcement that changes to zero hours contracts could cost businesses almost £3bn, many will be reassessing their recruitment plans  

The BCC's latest economic forecastsuggests unemployment could reach 5.2% byChristmas, with youth unemployment spiraling to 17%, as businesses continue to face pressure from high labour costs.  

While Andy Burnham has spoken about a new deal on education and changes to apprenticeships, if businesses cannot afford to take people on then progress will be slow.The ONS cites a downturn in hiring among SMEs as the main driver of falling vacancies.  

The BCC's cost stack calculator shows that costs for the average SME have increased by more than 70% in the last ten years due to successive governments' policies.  

Much more must now be done to bolster business confidence and unlock hiring by tackling cost pressures on firms, including a holiday on employer national insurance contributions for under 25s.