Finding a job just got harder in the UK

Jobseekers face the toughest UK market in years, with vacancies falling again, payrolled jobs down 85,000 on the year and more people claiming unemployment benefits than last month.

Data from the Office for National Statistics labour market overview shows the number of open positions fell 7,000 in April to June to 712,000, continuing a decline that has run for most of the past two years. At the same time, the Claimant Count rose on the month to an estimated 1.689 million.

Simply, this means that there are fewer job openings and more people chasing them.

Where the squeeze is coming from

The data shows that employers have pulled back on hiring rather than cutting existing staff at scale.

Payrolled employee numbers fell 85,000 in the year to May but held broadly flat month to month, and the unemployment rate stayed at 4.9%. The pattern suggests companies are leaving roles unfilled and freezing recruitment rather than making redundancies.

Quilter Cheviot Investment Manager Jonathan Raymond noted that businesses have become increasingly cautious about hiring as they contend with higher operating costs and an uncertain economic backdrop.

Higher employment costs introduced in recent years, including increased employer National Insurance contributions and minimum wage rises, have made each new hire more expensive, and firms have responded by slowing their intake.

Young people hit hardest

Hiring freezes hurt new entrants most, because companies that stop recruiting close the door on people trying to get their first role rather than those already in one.

Prime Minister Andy Burnham acknowledged the problem directly, placing clear emphasis on helping more young people into work in his first Downing Street speech yesterday.

Raymond said creating opportunities for younger workers while supporting business confidence will be one of the key tests of the new government.

Regular pay growth of 3.4% shows employers still pay to retain and attract staff in roles they genuinely need to fill, and public sector pay grew 5.5%, well ahead of the 2.9% recorded in the private sector. Sectors with persistent shortages continue to hire through the wider slowdown.

The numbers also strengthen the case for moving carefully. With vacancies scarce, candidates hold less negotiating power on salary than a year ago, and voluntary moves carry more risk when replacement roles take longer to find.

Some relief on the horizon

The cooling market feeds directly into the Bank of England’s interest rate decision in just over a week.

Weaker hiring strengthens the case for rate cuts, which would ease pressure on businesses and could eventually restart recruitment. Inflation figures due on Wednesday (22 July) will help settle whether the Bank moves in August or waits.

Until then, the market favours employers, and jobseekers should expect longer searches, more competition per role, and employers taking their time to commit.

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