UK Jobseeker Surge Marks Sharpest Rise In Five Years

The number of people seeking work in the UK has risen at its sharpest rate in half a decade, signalling a significant cooling in the labour market and raising concerns for both policymakers and businesses.

According to the latest KPMG and Recruitment & Employment Confederation (REC) survey, August saw the steepest rise in jobseeker numbers since late 2020. The increase comes as redundancies rise and companies rein in hiring amid higher costs and continued economic uncertainty.

At the same time, pay growth has slowed markedly. Starting salaries for permanent roles grew at their weakest pace in more than four years, while temporary staff wages also showed subdued growth. Recruiters reported that businesses are holding back on recruitment plans, with both permanent placements and temporary billings falling further into contraction.

The rise in jobseekers follows the increase in payroll taxes and the higher minimum wage introduced in April, which have added to employers’ cost pressures. With inflation still affecting input costs and the economic outlook remaining uncertain, firms appear increasingly cautious about workforce expansion.

The figures add to the challenges facing Chancellor Rachel Reeves ahead of the autumn Budget. The Treasury is under pressure from business groups to avoid further tax rises that could dampen recruitment further, while Parliament’s Work and Pensions Committee has urged ministers to extend the job-search requirement for benefit claimants from four weeks to three months in recognition of the tougher market conditions.

Labour market analysts warn that the combination of rising jobseeker numbers and slowing pay growth could weaken consumer confidence and spending power at a critical moment for the economy.

The data underscores a pivotal shift in the UK employment landscape, with recruitment activity slowing, competition for jobs intensifying, and policymakers facing increasing pressure to stabilise the market.