Redundancy Risks Rise as Vacancies Struggle to Keep Pace
The latest figures from the Office for National Statistics (ONS) suggest a cooling labour market as we move into 2026. While some indicators remain stable, a sharp rise in redundancies and the ongoing challenge of youth unemployment highlight significant hurdles for the UK economy.
Key Statistics from the ONS
- Unemployment and the Claimant Count: The unemployment rate remained steady at 5.1%, representing 1.84 million people. However, the claimant count has ticked up to 1.677 million, indicating more individuals are seeking support. Youth unemployment remains a critical pressure point: the 16 to 17 age group faces a 34.7% rate, while the 18 to 24 age group sits at 13.7%.
- Falling Payroll and Increased Competition: The number of payrolled employees saw a notable drop of 43,000 in December 2025, bringing the total to 30.2 million. While job vacancies saw a minor quarterly increase to 734,000, they remain 69,000 lower than this time last year. Consequently, competition is tightening: there are now 2.5 unemployed people per vacancy, an increase from both the previous quarter and the previous year.
- Economic Inactivity: There is a slight positive trend here, as inactivity decreased to 20.8%. This means 9.021 million people are currently inactive, which is 286,000 lower than 12 months ago. However, this figure is still 391,000 higher than levels seen before the pandemic.
- Pay Growth vs Inflation: Nominal pay growth is holding, with regular pay at 4.5% and total pay (including bonuses) at 4.7%. When adjusted for inflation, however, the gains for workers are marginal. Real regular pay growth stands at just 0.6%, while total pay growth is 0.8%, leaving household budgets under continued strain.
- Redundancies and Industrial Disputes: Redundancy rates have climbed to 4.9 per thousand employees, a figure higher than both the last quarter and the previous year. Additionally, labour disputes surged in November 2025, with 115,000 working days lost. Over half of this disruption was concentrated in the health and social care sector.
What This Means for Employers and Job Seekers
The current data signals a shift in power within the recruitment landscape. With 2.5 candidates for every available role, employers may find a larger pool of talent to choose from, but the rising redundancy rate suggests that business confidence is fragile. Firms are clearly tightening their belts, as evidenced by the fall in payrolled employees at the end of the year.
For job seekers, particularly those in the younger demographics, the market is becoming increasingly competitive. The minimal growth in real-terms pay means that “the cost of working” remains high, making attractive benefits and career development paths more important than ever for retention.
The sharp increase in working days lost to disputes, particularly in health and social care, reminds us that workforce morale and industrial relations remain volatile. Businesses must prioritise transparent communication and robust workforce planning to navigate these turbulent waters.
How Pure Staff Can Help
Navigating a changing labour market requires a recruitment partner who understands your sector inside and out. Whether you need flexible temporary staff to manage seasonal peaks in industrial and warehousing, or reliable permanent candidates for driving and commercial roles, Pure Staff is here to support you.
We can help you adapt your hiring strategy to these new dynamics, ensuring you attract the right talent while remaining compliant and cost-effective.
Get in touch with our team today to discuss your workforce requirements for 2026.
