Job vacancies crash to five-year low as bosses freeze hiring

Britain’s jobs market is flashing red as vacancies plunge to 712,000, unemployment remains stuck at 4.9% and private-sector pay growth weakens. With employers freezing recruitment and small firms trapped in survival mode, Andy Burnham faces an early test of his promise to revive growth and living standards.

JOB VACANCIES SLUMP TO FIVE‑YEAR LOW

Bosses freeze hiring, unemployment sticks at 4.9%, and pay growth weakens, piling pressure on Andy Burnham’s promise to revive Britain

The UK’s jobs market is in the doldrums. New figures show employers slashed job vacancies in May, dragging openings down to 712,000 almost half the level seen in 2022. It’s the latest sign the UK economy is fragile, battered by global conflict, rising costs and months of uncertainty.

The Office for National Statistics says bosses are putting off hiring, waiting to see what happens next in the Middle East and at home as the new Cabinet members get to grips with their new responsibilities.

Photo by Sasun Bughdaryan on Unsplash

UNEMPLOYMENT STUCK

Unemployment stayed at 4.9%, the same as April but economists think it’s likely to climb over the summer.

The UK’s jobless rate has been creeping up for two years, rising from a low of 3.6% in 2022 to a peak of 5.2% last year. It dipped slightly after the autumn budget, but confidence has slumped again by global turmoil. Small firms say they’re seeing fewer applicants, fewer contracts and fewer opportunities.

PAY GROWTH WEAKENS

Burnham has promised to raise living standards across every region, but the latest pay data shows the challenge ahead.

Private‑sector pay growth dropped to 2.9%, pulling average earnings growth (including bonuses) down to 4.3%. Economists expected 4.5% but businesses are tightening belts.

For small firms, weaker pay growth means:

• customers with less money to spend

• employees struggling with rising bills

• slower demand on the high street

• tougher trading conditions

FIRMS CUTTING BACK UNDER PRESSURE

Suren Thiru, chief economist at ICAEW, leads on the accountancy body’s research and says:

“These figures point to a fragile labour market, with soaring employment taxes and economic turbulence pushing firms to limit recruitment and cut pay awards.”

He warned the fall in vacancies is a warning sign that demand for staff is evaporating under:

• sky‑high staffing costs

• more regulation

• heightened uncertainty

• rising taxes

And he says jobseekers will face more strain over the summer, with unemployment likely to rise as firms freeze hiring.

SMALL & MICRO BUSINESSES FEEL THE PRESSURE

• Fewer vacancies mean fewer opportunities

• weaker pay growth results in weaker customer spending

• rising costs add up to tighter margins

• uncertainty leads to delayed investment

• global conflict contributes to higher energy and supply costs

Many micro‑businesses say they’re stuck in survival mode and can’t get into not growth mode.

LESS PRESSURE FOR RATE RISES

Economists say weaker pay growth could ease pressure on the Bank of England to raise interest rates again.

Several Bank officials have warned that stubbornly high pay was keeping inflation sticky but May’s slowdown may give them breathing room.

For small businesses juggling loans, overdrafts and credit, any pause in rate hikes is welcome but a rate cut would be even more welcome.

Britain’s labour market is wobbling:

• vacancies down to a five‑year low

• unemployment stuck at 4.9%

• pay growth weakening

• hiring freezes spreading

• uncertainty rising

Andy Burnham has promised a decade of growth but small businesses say the jobs market needs stabilising urgently, because when vacancies fall, confidence falls and small firms struggle.