UK unemployment rises to 5.2% as hiring slows and youth joblessness remains high

UK unemployment has risen to 5.2%, its highest level since 2021, as payroll numbers fall and hiring activity cools, according to the latest labour market figures.

The data shows vacancies continuing to ease from post-pandemic highs, while wage growth has slowed compared with earlier peaks. The shift marks a clear change from the tight labour market conditions seen over the past two years.

Young people remain disproportionately affected. Youth unemployment continues to sit well above the national average, intensifying concern about access to entry-level roles at a time when employers are reassessing hiring plans.

Economists say rising employment costs — including higher employer national insurance contributions and minimum wage increases — are contributing to caution in recruitment decisions. At the same time, automation and AI adoption are reshaping workforce planning, particularly in administrative and junior roles.

The cooling labour market comes amid broader debate about the future of work and the pace of technological change. Speaking earlier this year, Technology Secretary Liz Kendall acknowledged the disruption AI could bring, stating:

“I want to level with the public. Some jobs will go.”

As competition for roles increases, employers are becoming more selective in recruitment, with many prioritising specialist or transformation-focused hires over volume entry-level hiring.