Unemployment remains at highest rate in five years

UK unemployment has remained at the highest rate in five years, new official figures show.

The jobless rate was to 5.2% in the three months to January, the Office for National Statistics (ONS) has said.

Before last month, such a high hadn't been seen since the three months to January 2021.

The increases in the last three months were "largely" due to young people, aged 18 to 24, the statistics body said.

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The yearly increase, it said, was due to the rise in youth unemployment as well as those aged 50 to 64 years.

The unemployment rate among 18 to 24-year-olds rose 14.5% while the number of people in this age group out of work and not in full-time education increased to the highest rate since 2014, 19.2%.

While unemployment rose across the board, the impacts were not felt evenly: male unemployment is 5.5%, while female unemployment is 4.8%.

The ONS, however, has continued to advise caution when interpreting changes in the monthly unemployment rate and job vacancy numbers over concerns about the reliability of the figures.

Why?

Employers have faced higher costs for employing staff due to the rise in employers' national insurance contributions in April.

Higher minimum wages for younger workers contributed to the growth in unemployment among that cohort, Catherine Mann, a senior Bank of England economist and interest rate setter, said last month.

Lower pay rises

At the same time, wage growth was at its lowest in more than five years, the ONS said.

It means pay is still rising faster than inflation, but more slowly than before, in both the private and public sectors.

Average pay, including bonuses, rose 3.8%, while average weekly earnings, which include bonuses, increased 3.9%.

It's a big fall. Just a month earlier, those measures of pay increases had both been 4.2%.

Green shoots?

There are some signs of a rebound in the jobs market, though, as the number of payrolled employees rose slightly in January.

The number of job vacancies remained stable, according to the ONS.

Smaller businesses were more reluctant to hire staff and reduced the number of vacancies they posted.

But that was made up by bigger firms looking for more staff, the ONS added.

Redundancy numbers fell in the last three months, though they are higher compared to a year ago.

The number of people reporting redundancy was 4.5 per 1,000 employees, from November 2025 to January 2026.

Of course, none of this reflects the impact of the Iran war, which, due to the oil and gas price rises, will increase inflation.

The war impact

Things costing more can mean people spend less and businesses are under pressure, leading them to hire fewer staff and potentially let go of workers.

As a result, these green shoots may evaportate and unemployment may rise further.

(c) Sky News 2026: Unemployment remains at highest rate in five years