Job vacancies at five-year low as smaller firms scale back recruitment

Image source, Getty ImagesPublished18 August 2026, 07:25 BSTUpdated 2 hours agoThe number of job vacancies has fallen to its lowest level in more than five years as smaller businesses cut back on recruitment, official figures indicate.

Vacancy numbers fell over the May-to-July period to 707,000, according to the Office for National Statistics (ONS), which said small firms were citing labour and operating costs as reasons for scaling back hiring.

Energy costs have risen since the Iran war began, and companies have also said that increases in National Insurance and the minimum wage have made it more expensive to employ staff.

Earnings growth picked up slightly, although private sector wages grew at their slowest rate for nearly six years.

Regular earnings - which exclude bonuses - grew at an overall annual pace of 3.5% in the three months to June, the ONS said. Pay growth for the public sector was 6.1%, due to the timing of the latest NHS pay awards, while in the private sector it dipped to 2.8%.

"The UK labour market remains stuck in a low-churn limbo, with employers reluctant to hire, fire or offer bigger pay rises as they grapple with rising costs, intensifying global headwinds and heightened policy uncertainty," said Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales.

"The persistent slide in vacancies is a red flag for the jobs market, suggesting labour demand is shrinking amid soaring employment and energy costs, while greater automation is also squeezing some entry-level roles."

The ONS said the labour market was "little changed overall", with the unemployment rate remaining at 4.9%. Its figures showed , externalthe number of payrolled employees fell by 13,000 in June, and early estimates suggest it dropped by a further 13,000 in July.

Responding to the latest figures, the Secretary of State for Work and Pensions, Pat McFadden, said it was "encouraging to see signs of progress".

"We've already put in places reforms to get Britain working again," he added, citing changes to Universal Credit "to remove barriers that held people back from employment" and spending on support to help people with health conditions and disabilities move into work.

But shadow chancellor Mel Stride said: "Job vacancies are at their lowest in over five years, and unemployment remains high. Labour are the party of welfare, not work."

On Tuesday, the Conservatives announced proposals to make it easier for young people to get summer jobs. The party said it would give young workers more flexibility around breaks and shift patterns, and simplify evening working restrictions at weekends and outside term-time.