Today’s ONS figures have provided the Government with some much-needed good news. Following a prolonged period of rising unemployment, this month’s Labour Force Survey has recorded a fall in unemployment.

However, below the surface the UK’s labour market remains in a precarious state. Economic inactivity has risen, job vacancies continue to fall, redundancies are up and wage growth is sluggish. All of which may leave many workers and jobseekers poorly positioned to see off the headwinds of renewed conflict in the Middle East.

Unemployment falls as economic inactivity rises

Unemployment has unexpectedly fallen from 5.1% to 4.9%, which means that 60,000 fewer people are unemployed than three months ago.

Figure 1: Percentage of adults aged 16+ who are unemployed

Source: ONS dataset A01 Table 1: Unemployment 16+ - April 2026 (Great Britain, seasonally adjusted)

However, there is a risk that this good news could be over interpreted. 200,000 more people are unemployed than a year ago. And this month’s drop in unemployment does not necessarily indicate more people are finding work. In fact, the proportion of working age adults in employment has fallen by 60,000. Youth unemployment also remains a significant concern at 14.3%, with 19,000 more young people out of work compared to three months ago.

The UK’s recent rise in unemployment has in large part been driven by people moving from economically inactivity, i.e. out of work and not looking for a job, into unemployment. In light of the UK’s competitive labour market, many people transitioning into unemployment will likely face substantial challenges in obtaining work.

Along with a fall in unemployment, the latest ONS figures also reveal that economic inactivity has risen on the quarter. This raises the prospect that rather than finding work, some of those previously unemployed people may be returning to economic inactivity. In particular, economic inactivity has risen amongst students, with fewer looking to undertake work alongside their studies.

Falling vacancies and high levels of redundancies spell trouble for workers and jobseekers

This month’s ONS figures will prove worrying reading for workers and job seekers in the UK. The latest redundancies indicate that job security is under threat, with redundancy rates standing at 4.6 per thousand, up from 4.0 a year ago. The current number of vacancies is also concerning, with the provisional figures for January- March 2026 showing just 711,000 vacancies, the lowest level in almost five years.

Figure 2: Job vacancies in the UK (2021-2026)

Source: ONS dataset A01: Vacancies – April 2026 (Great Britain, seasonally adjusted)

The IMF has warned that of all the major economies the UK faces the biggest hit to growth from the Iran war. This could result in employers further scale back hiring, and let more staff of, in response to weaker demand and rising uncertainty, making it even harder for people to find work. Placing even greater pressure on an already weak labour market.

Pay is stagnating

Protracted conflict in the Middle East will likely place increased pressure on prices. Yet today’s figures indicate that many workers may already be struggling to balance the books.

Pay growth is at its weakest for more than five years as nominal pay growth fell to 3.6%. Real wage growth has also slowed to just 0.2%. And in the private sector, pay growth stands at only 3.2%, the lowest growth since 2020. Meaning inflation is already eroding increases to earnings before any additional cost pressures are felt.

At the start of April an estimated 2.7 million workers benefitted from an increase in the National Living Wage - the impact of which will not have been captured by this latest data. While this may provide some support to low-income households, the impact of rising prices often hits low-paid and insecure workers hardest, and many workers are still coming to terms with the lasting effects of the cost of living crisis earlier this decade. Nearly a quarter of workers report they are unable to cover an unexpected £850 expense, and the Government must be ready to increase support for low-income households if conditions worsen further.

The Government must act to protect standards of living

Today’s figures point to a fragile labour market beneath a surprising improvement in the headline rate of unemployment. The risk is that employers scale back hiring further, making it harder for people to find work and that sluggish wage growth continues placing even greater pressure on households.

It therefore remains critical that Government delivers on its ambition to strengthen access to secure and flexible jobs, increase investment in employment support, and de-risk pathways into employment for those suffering with their health – even as calls to cut welfare budgets to fund increased defence spending grow.

Implementing such cuts against this uncertain backdrop would risk pushing low-income households further into precarity at a time of renewed financial pressure, as well as further dampening demand and reducing growth in weaker local labour markets across the country.

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