Unemployment stuck at five year high as youth rate climbs

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

The jobless rate was 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 youth joblessness, the statistics body said.

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The unemployment rate among 18 to 24-year-olds rose to 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%, according to analysis of payroll figures from the Resolution Foundation thinktank.

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

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 had 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%.

Just a month earlier both measures of pay increases had been 4.2%.

Green shoots?

There are some signs of a rebound in the jobs market, though, as the number of staff on payrolls 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.

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

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

None of the latest figures reflect the impact of the Iran war, which, due to the oil and gas price rises, is expected to increase inflation.

Impact of war

Higher prices can mean people spend less, putting businesses under pressure and potentially leading to them hiring fewer staff and letting go of workers.

As the conflict continues the green shoots could evaporate leading to unemployment climbing even higher.

(c) Sky News 2026: Unemployment stuck at five year high as youth rate climbs