The Work Foundation at Lancaster University responded to the labour market figures for March 2026 released by the Office for National Statistics. Ben Harrison, Director of the Work Foundation at Lancaster University commented:

“Today’s figures indicate the UK labour market continues to face a wide range of significant challenges, even before the effects of increased global instability and rising oil prices are captured in the official statistics.

Average pay growth falls rapidly as global volatility could impact future growth

“Growth in nominal wages has fallen sharply just as inflationary pressures look set to increase once more.

“Average nominal wage growth has slowed to 3.8%, and is at its lowest since November 2020, ending a 48 month run of above 4% wage growth. Private sector wage growth is now at 3.3%, meaning many workers will be seeing little to no real improvement in their living standards as inflation remains above target at 3.0%.

“More broadly, renewed global volatility risks derailing Government ambitions to ease living costs in 2026 and could also mean Bank of England policymakers decide against a further cut to interest rates later today.

“The Government must therefore remain on high alert and ready to provide additional support should conditions deteriorate further. Rising prices will disproportionately affect low-paid and insecure workers, many of whom are still grappling with the legacy of the cost-of-living crisis earlier in the decade.

Unemployment still high as young people hit hardest

“Unemployment remains at 5.2%, its highest level since late 2020, just below the peak forecasts of both the OBR and Bank of England for 2026. Meanwhile, economic inactivity has fallen to 20.7%, the lowest in nearly six years. Although this is positive to see, the combination of falling inactivity and stubbornly elevated unemployment suggests many are struggling to find work.

“Young people are being hit particularly hard. Around one in seven 18–24 year olds are now unemployed, with the rate at 14.5% representing a ten-year high. There are also 230,000 young people who have been out of work for six months or more, who could be eligible for the Government’s new Youth Jobs Grant. But to succeed, the scheme must deliver secure, sustainable jobs - otherwise it risks worsening physical and mental health and doing little to lift young people out of long-term reliance on the welfare system.