‘A flashing red warning light’: Britain’s vacancies hit their lowest level outside the pandemic since 2014

Britain’s labour market is showing increasingly worrying signs of strain, with wage growth slowing to its weakest pace in nearly six years and job vacancies falling sharply as employers rein in recruitment ahead of the Autumn Budget.

Total earnings, including bonuses, rose by 3.7 per cent in the three months to August, down from 3.9 per cent in the previous period and the lowest rate since late 2020, according to the Office for National Statistics.

Regular pay grew at the same rate, leaving earnings 0.8 per cent higher after inflation.

Unemployment, meanwhile, fell from 4.9 per cent to 4.7 per cent, its lowest level since July 2025. But the improvement offered limited reassurance as vacancies dropped by 21,000 to 691,000 in the three months to September — their largest quarterly decline since the start of the year.

Outside the pandemic, openings were last at or below this level in 2014.

“The UK is still amidst a jobs drought,” said Ben Harrison, director of the Work Foundation at Lancaster University. He warned that too few suitable jobs were available for young people, risking “locking young people out of employment before they have even had the chance to get started”.

There are 715,000 unemployed people aged 16 to 24, 54,000 more than a year earlier despite a quarterly decline. Harrison called for a devolved Community Jobs Fund that he said could create more than 50,000 roles in care, community centres and libraries.

The government pointed to the fall in unemployment and commitments from hospitality and retail businesses to provide 200,000 jobs for young people not in education, employment or training.

Yet employers remain cautious. Lee Chant of ManpowerGroup UK said businesses were holding back major hiring and investment decisions until the Budget clarified the economic outlook. “Although the labour market isn’t standing still, it is waiting. But patience is running out,” he said.

Suren Thiru, chief economist at the ICAEW, described the market as “running on idle”, warning that falling vacancies were a “flashing red warning light”.

With energy costs squeezing households and businesses facing uncertainty over taxes and recruitment costs, the risk is that weaker hiring becomes entrenched. For young workers in particular, a labour market that appears stable in headline figures may offer fewer and fewer routes into employment.