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Unemployment remains at four-year high of 5.1% as experts warn "we still carry the economic hangover of 2025"

ended 20. January 2026

UNEMPLOYMENT remains at a four-year high of 5.1% as experts warn “we still carry the economic hangover of 2025”.

The UK unemployment rate for people aged 16 years and over was estimated at 5.1% in September to November 2025, the latest Office for National Statistics (ONS) jobs data released today has revealed.

Vacancies in the UK for October to December 2025 suggest a small increase of 10,000 (1.3%) to 734,000 compared with July to September 2025.

Payrolled employees in the UK fell by 155,000 (0.5%) between November 2024 and November 2025, and decreased by 33,000 (0.1%) between October 2025 and November 2025.

When looking at September to November 2025, the number of payrolled employees fell by 135,000 (0.4%) over the year and by 43,000 (0.1%) over the quarter.

The early estimate of payrolled employees for December 2025 decreased by 184,000 (0.6%) on the year, and by 43,000 (0.1%) on the month, to 30.2 million.

The annual growth in employees' average regular earnings was 4.5% in September to November 2025. This is slightly down from the previous three-month period (4.6%). 

The last time it was lower than 4.5% was in December 2021 to February 2022, when it was 4.3%.

Annual growth in total earnings was 4.7% in September to November 2025. 

This is slightly down from the previous three-month period (4.8%). The last time it was lower than 4.7% was in April to June 2025, when it was 4.6%.

Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said we are still feeling the effects of a stalled 2025.

He added: "We might be in a new year but we still carry the economic hangover of 2025. Nothing has happened to make employers eager to increase headcount and they will continue to find non human efficiencies. With more volatility emanating from across the pond we need a plan and we need it quick."

Kate Underwood, Founder at Southampton-based Kate Underwood HR and Training, said the jobs market is resetting.

He continued: "UK hiring isn’t broken, it’s sobering up. Unemployment’s up and payroll headcount is down, so yes, businesses are cautious. But it’s not a cliff edge. Employment’s steady, vacancies have nudged up, and pay is still rising (just not racing). 

"This feels like a reset, not a recession stampede. For 2026 I expect slower, smarter hiring. Less “growth for growth’s sake”. More “only if it pays for itself”. SMEs will keep roles tighter, test hires harder, and lean on part-time, fixed-term and contractors to stay agile. Bots? Use them, but don’t kid yourself they’re a magic money machine. 

"Automate the boring admin, not the judgement calls. A bot won’t handle a grievance, calm a toxic manager, or protect your culture. And if tech replaces a role, you still need to run a proper redundancy process. No shortcuts. If you’re pausing hiring, shout louder about progression for the team you’ve already got. That’s how you stop your best people walking."

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said AI is being increasingly used to make savings.

He added: "The rising costs of employing staff is driving a growing number of smaller businesses to use AI and outsourcing solutions to fulfill roles traditionally filled by local people who are now missing out on these opportunities. 

“With minimum wage, National Insurance and pension contribution costs at their highest, along with increased company taxation, there is little incentive to employ and it's inevitable unemployment will continue to rise over 2026.”

8 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
We might be in a new year but we still carry the economic hangover of 2025. Nothing has happened to make employers eager to increase headcount and they will continue to find non human efficiencies. With more volatility emanating from across the pond we need a plan and we need it quick.
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Editor
Justin Moy
Managing Director at EHF Mortgages
The rising costs of employing staff is driving a growing numbersmaller businesses to use AI and outsourcing solutions to fulfill roles traditionally filled by local people who are now missing out on these opportunities. With minimum wage, NI & pension contribution costs at their highest, along with increased company taxation, there is little incentive to employ and it's inevitable unemployment will continue to rise over 2026.
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Editor
Kate Underwood
Founder & Chief People Strategist at Kate Underwood HR and Training
UK hiring isn’t broken, it’s sobering up.
Unemployment’s up and payroll headcount is down, so yes, businesses are cautious. But it’s not a cliff edge. Employment’s steady, vacancies have nudged up, and pay is still rising (just not racing). This feels like a reset, not a recession stampede.
For 2026 I expect slower, smarter hiring. Less “growth for growth’s sake”. More “only if it pays for itself”. SMEs will keep roles tighter, test hires harder, and lean on part-time, fixed-term and contractors to stay agile. Bots? Use them, but don’t kid yourself they’re a magic money machine. Automate the boring admin, not the judgement calls. A bot won’t handle a grievance, calm a toxic manager, or protect your culture. And if tech replaces a role, you still need to run a proper redundancy process. No shortcuts.
If you’re pausing hiring, shout louder about progression for the team you’ve already got. That’s how you stop your best people walking.
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Scott Gallacher
Director at Rowley Turton
The headline numbers suggest the jobs market is softening rather than collapsing, but on the ground it increasingly feels like a two-tier system. We’re still seeing a shortage of experienced, skilled workers, while school leavers and graduates are finding it harder than ever to get a foot on the career ladder. In a small firm, hiring qualified staff is often the least disruptive and least risky option, simply because the work still has to get done. That said, we’ve taken on a graduate trainee partly because recruiting qualified staff is so difficult, yet every experienced role we advertise attracts a flood of graduate applications, which makes me worry about how few genuine entry-level opportunities there are — including for my youngest, who has just started their degree.
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Craig Fish
Director at Lodestone Mortgages
This data paints a far more realistic picture of the UK jobs market and it’s not a comfortable one. Unemployment is edging up, payrolled jobs are falling, and wage growth is clearly losing momentum. That combination matters, because while earnings growth is slowing, the cost of living hasn’t eased anywhere near enough for most households.Vacancies ticking up slightly doesn’t change the wider trend. Employers are clearly becoming more cautious, hiring is being delayed, and headcount reductions are showing through in the numbers. That’s typical behaviour when businesses feel uncertain about the year ahead. Looking into 2026, this suggests a tougher environment: weaker job security, softer wage growth, and sustained pressure on household finances. For consumers, that means less confidence. For the wider economy, it raises the risk that something gives, whether that’s spending, hiring, or parts of the asset market. The strain is building, and these figures suggest we’re now seeing it
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
The modest rise in vacancies can be ignored in my view because the quality of these roles is questionable while genuine career opportunities are being erased by a cocktail of National Insurance hikes and the treasury's red tape.

We are witnessing the quiet strangulation of the private sector where employers are being forced to choose between hiring a human or invest in a bot that does not require pension contributions or sick pay.

Wage growth slowing to 4.5% might please the Bank of England but for households facing rising bills it means precious little as the cost of living crisis has simply entered a new chronic phase in everybody's lives.
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Sam Kirk
Managing Director at J-Flex Rubber Products
This is no longer a “temporary blip”, this is a systemic failure of economic policy. Instead of rebalancing the economy and unleashing growth, the Government has steam rollered business confidence and choked job creation.

The message to Ministers is simple: stop sugar-coating bad news. This data shows that the Government’s economic policies are not working for workers, not working for businesses, and certainly not working for the next generation.
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Jen David
Owner at Jen David
The job market has been difficult for some time now and I don't foresee any improvement in the short to medium term. People trying to enter the workforce now will have AI snapping at their heels for their whole career - if they manage to get a job at all. The government needs to balance the use of AI with the use of humans before having a job becomes a privilege rather than an expectation.