Real average weekly earnings (regular pay): GB
Indeed, when we compare single month pay estimates for February 2025 and 2026, workers’ pay has actually decreased by 68p a week. After just three years of real pay growth following the last cost of living crisis, workers look set to be entering another period of shrinking pay packets.
Annual growth in average weekly earnings (regular pay) and CPIH inflation: GB
But while this might reduce the chances of a wage-price spiral, it's bad news for workers whose real wage growth is diminishing. After factoring in inflation, wages grew by 0.2% in the year to Feb. Any further weakening in nominal pay – or uptick in inflation – will turn real wage growth negative.
Growth in nominal private sector average weekly earnings, change since a year earlier and annualised change compared to three months earlier: GB
Turning to pay, and wages are continuing to weaken. Across the economy as a whole, wages rose by 3.6% in the year to February, and by just 3.2% in the private sector. Again, this is very different to the picture in 2022 when Russia invaded Ukraine – back then, private sector wage growth was 4.9%.
16+ unemployment rate (left panel) and vacancy rate (right panel): UK
Overall, the lab mkt is far looser than when Russia invaded Ukraine. This means one silver lining going into this energy price shock: in 2022 workers responded to inflation by demanding higher wages, driving up inflation further and contributing to interest rate rises. That’s less likely this time.
Unemployment rate, by age: UK
There's also been a small fall in unemployment for 16-24-year-olds, which declined by 0.2 ppts, to 15.8%. But youth unemployment is still persistently higher than the unemployment rate across all ages, with a gap of 10.9 ppts.
Unemployment rate: UK
But this month there was a surprise fall in the unemployment rate, which fell from 5.2% in the three months to Jan to 4.9% in the three months to Feb. That’s been driven by a 0.8 ppt drop in the single-month rate over the last two months(!), potentially indicating volatility in the underlying data…
Number of paid employees according to real-time PAYE data: UK
16-64 employment rate: UK
The big picture is that the labour market has been cooling for over a year now – but the very latest data is mixed. Payrolled employment has resumed its gradual decline (down by 11,000 in March and 6,000 in February), and RF’s employment rate estimate has also continued to fall.
This morning’s stats show that the labour market remains loose, with high unemployment (albeit with a surprise fall in the latest month) and weak wage growth. A thread about what this means as we go into an energy price shock from me, @louisemurphy.bsky.social and @jametg.bsky.social:
Over the longer term, the challenges facing the FWA and the new responsibilities it will take on mean it’s more important than ever that it has the funding and powers it needs to succeed. Read the full piece here: www.resolutionfoundation.org/publications...
Value of National Minimum Wage arrears identified, by whether HMRC-assessed or self-corrected: UK
Financial penalties are also too low to deter non-compliance. Penalties for min wage underpayment are only up to 2x the arrears owed, and half of cases are ‘self-corrected’ and attract no penalty at all. We recommend increasing penalties to up to 4x the arrears owed.
Real-terms (2026-27 prices) budget of the labour market enforcement agencies that have become part of the Fair Work Agency: GB/UK
The FWA’s budget (announced today) will be around a quarter higher in real terms than its predecessors. This is welcome, as the UK falls well short of international benchmarks for inspector numbers, but comes in the context of its remit expanding – so the Government should keep this under review.
But creating the FWA should be the starting point for reform, not the end. The long-run success of the FWA depends on its resources and powers.
Government departments responsible for enforcing labour market law: England and Wales/GB/UK, March 2026
The creation of the FWA marks a step change in the UK’s approach to enforcing workers’ rights, reducing fragmentation and bringing the UK more into line with international practice. It’ll be a single point of contact for workers and employers alike, and enable better information sharing.
Estimated scale of selected labour market violations: GB/UK, various dates
Enforcement reform is much needed. It’s hard to know exactly how much unlawful behaviour exists, but survey data suggests that 445,000 jobs pay below the minimum wage, 2.2m jobs come with no paid annual leave, and 1.4m workers don’t receive a payslip.
Today the Fair Work Agency was launched, bringing enforcement of several employment rights under one roof. This is a really welcome move, but its impact will depend on its resources and powers. A thread summarising the latest RF Labour Market Outlook: 🧵 www.resolutionfoundation.org/publications...
Happy new tax year to all who celebrate! Here's a quick 🧵on the tax and benefit changes coming in this month in the context of rising energy bills. www.resolutionfoundation.org/publications...
Today’s labour market stats were better than expected – headline unemployment didn’t rise thanks to a surprise Jan single month number, and payrolled jobs rose. Real wages are still growing (slowly), but war in the middle east clouds the outlook there. Thread from me and @hannahslaughter.bsky.social
Chart showing Annual real growth in median equivalised household disposable income after housing costs, by non-pensioner income vigintile: UK
Changes to benefits and projected wage growth mean 2026-27 could see progressive income growth.
But this week’s dramatic swings in energy prices loom large over the near-term living standards forecast...
Today’s labour market statistics show that the UK’s unemployment problem is growing, with youth unemployment at its highest rate in over a decade. Here’s our @resolutionfoundation.org thread, from me and @louisemurphy.bsky.social :
Mike Brewer, Deputy Chief Executive of the Resolution Foundation, said: “Britain is getting older and sicker, while a greater share of its population has a disability. While these trends affect the whole of society, they are starkest in the poorest half of working-age families across the country. “But while we talk a lot about the effects of ageing and ill-health, the implications on demand for unpaid care is largely absent from political debate. That’s despite Britain having an ‘unsung army’ of one million people who do at least 35 hours of unpaid care work every week – equivalent to a full-time job. “It is time to provide better support for these carers and their families, just as we have done with working parents in recent decades. Carers deserve greater financial support in Universal Credit, more help to stay in work if they want to, and decent social care system to help the relieve the pressure on families.”
🚨 New
Britain’s ‘unsung’ army – a million people in poorer working-age households now have full-time unpaid caring responsibilities .
Unchanged wage growth + less inflation = stronger real wages.
The Bank projects more than twice as much real pay growth in the next three years (3.5%) as the OBR does over the next five (1.6%). If the Bank is right, that's a much rosier outlook for living standards.
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Black, Asian and Minority Ethnic graduates are invited to apply for a 12-week training programme based in our Westminster office and paid at the London Living Wage.
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Real average weekly earnings (regular pay), actual, pre-recession peak and pre-recession trend: GB
Taking a step back reveals an even bleaker picture. After accounting for inflation, average weekly wages are just £31 above their pre-financial crisis peak – a massive £281 below where they would have been if wages had continued to grow at their pre-crisis rate.
Real average weekly earnings (regular pay): GB
This is bad news for workers: weekly earnings rose by just just £4.98 in real terms over the 12 months to November 2025 – barely enough to cover the cost of a high-street meal-deal.
Annual growth in average weekly earnings (regular pay) and CPIH inflation: GB
Economy-wide nominal wage growth remained strong – at 4.5% in the year to November 2025. But with inflation still above the 2 per cent target, this means that regular wages have grown by just 0.6% in real-terms in the 3-months to November compared to last year.
Growth in nominal private sector average weekly earnings, change since a year earlier and annualised change compared to three months earlier: GB
On pay, there's some evidence that wage growth may gradually be picking up the pace. Annual growth in private sector nominal wages continued to fall – but looking at a shorter-term measure (the annualised 3-month change), private sector pay growth ticked up to 3% between Jun-Aug and Sep-Nov 2025.
Vacancy rate, by industry: UK
On the slightly more positive side, however, vacancies have stopped falling - which, together with the fact that the unemployment rate is essentially unchanged on the previous month, suggests that unemployment could have peaked for the time being, albeit at too high a level.
Change in the 16-64 employment rate compared to January 2020, and contributions from participation and unemployment: UK
And it’s worth remembering that all of the fall in employment relative to pre-Covid has been driven by unemployment, not inactivity – the UK lacks jobs, not just jobseekers. See our Q4 2025 Labour Market Outlook for more: www.resolutionfoundation.org/publications...
Employment rate, unemployment rate, and inactivity rate, LFS and RF estimates: UK
This means that the 16-64 employment rate we calculate based on admin data and population estimates is now at 75.3%, down from a high point of 76.6% in 2023. The unemployment rate remained at 5.1%, not far off its Covid peak of 5.3% and otherwise the highest in almost a decade.
Number of paid employees according to real-time PAYE data: UK
This month we saw another fall in payrolled employment. The number of employees fell by 33,000 in November and a further 43,000 in December according to HMRC PAYE data (though the latter is likely to be revised) and is down by 184,000 on the year.