UK companies continued to shed jobs over the summer, as wage growth slowed, new data shows.
The latest labour market report, just released, shows that the number of employees on company payrolls fell by 26,000 in August, and dropped by 145,000 compared with August 2025.
Despite that drop, though, the UK’s unemployment rate for people aged 16 years and over remains at 4.9% for the May to July quarter.
Workers’ pay packets are being squeezed, though, especially in the private sector.
Total pay growth (including bonuses) slowed to 3.9% in May to July, down from 4.2% on the previous three-month period. Regular pay (excluding bonuses) growth stuck at 3.5%.
But while private sector pay rose by 2.9%, annual average regular earnings growth was 6.3% for the public sector. That’s because NHS staff pay rises were paid out earlier this year.
ONS director of economic statistics Liz McKeown says: “The labour market remains broadly stable, with employment and unemployment rates largely unchanged in the latest period. However, payrolled employee numbers continue to edge down, with falls over the past year particularly evident in the retail and hospitality sectors.
“Regular wage growth has remained relatively stable in recent months, while total pay growth, which includes bonuses, has eased and was last lower nearly six years ago. There remains a notable difference between public and private sector pay growth, with public sector figures continuing to be affected by the timing of NHS pay awards this year.”
The estimated number of vacancies in the UK decreased in the latest quarter.
The ONS estimates that in June to August there was a decrease of 8,000 (1.1%) to 702,000, compared with March to May 2026.
McKeown says: “Vacancies remain at their lowest level outside the pandemic period for more than a decade, with smaller businesses continuing to report that increased labour costs are affecting hiring decisions.”
The UK state pension is set to rise by 3.9% next year, it appears, following today’s wage growth figures.
Under the triple-lock system, pensions rise by the highest of average earnings, inflation, or 2.5%.
So today’s data showing that total pay rose by 3.9% over the last year is likely to be the figure used to set the pension increase (unless we get a surge of inflation in September’s data to 4% or higher).
Assuming, of course, that the government continue to stick with the triple-lock – as there are calls to suspend it.
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