August 2026 ONS Labour Market Data: Education Records Steepest Vacancy Fall as Hiring Hits Decade low

The Office for National Statistics published its August 2026 labour market figures this morning, covering April to June 2026 for the Labour Force Survey and May to July 2026 for vacancies.

The headline picture is a market going nowhere. Employment, unemployment and inactivity are all effectively where they were three months ago. The two findings worth the sector’s attention are the level of vacancies, now at a point not seen outside the pandemic in over a decade, and the gap that has opened between public and private sector pay growth.

Vacancies are at a level not seen outside the pandemic since 2014

Total vacancies stood at 707,000 in May to July 2026, down 6,000 (0.8%) on the quarter. Outside the coronavirus pandemic period, the last time vacancies were at or below that level was September to November 2014, when there were 703,000.

Total vacancies are now 81,000 (10.3%) below their January to March 2020 pre pandemic level and down 19,000 (2.7%) on the year. There were 2.5 unemployed people per vacancy in April to June 2026, a ratio that has held at 2.5 since July to September 2025, up from 2.3 a year earlier.

The level is the solid part of this. The short term movements are not, and ONS is explicit about it: the quarterly fall of 6,000 and the 11,000 decline since January to March both sit inside the survey’s 95% confidence interval of approximately plus or minus 32,000 vacancies. Read the direction of travel over years rather than the size of any single quarter’s move.

Education recorded the largest percentage fall of any sector, with caveats

Vacancies fell in nine of the eighteen industry sectors on the quarter. Education recorded the largest percentage decrease, down 7.3%, or 4,000 vacancies. Human health and social work activities recorded the largest fall by volume, down 5,000 (4.1%) on the quarter and 11,000 (8.5%) on the year.

Two caveats matter here. First, sampling variability for a typical industry sector runs at around plus or minus 6% of level, so a 7.3% quarterly fall sits only just outside what the survey can reliably distinguish from noise. Second, the education sector under the standard industrial classification covers schools, colleges, universities and independent training providers together, and is dominated by volume from schools and higher education. This is not a measure of FE recruitment specifically.

With those qualifications, the direction is still notable. Health and social care is among the largest single destinations for further education learners, apprentices and adult retraining, and it has now shed vacancies for four consecutive readings on an annual basis.

Small employers are driving the fall

The largest quarterly decrease by employment size band was among businesses with one to nine employees, down 8,000 vacancies (7.8%) to 95,000. Outside the pandemic, that is the lowest level for that band since January to March 2014. Over the year, vacancies at those smallest employers fell by 18,000, a drop of 16.1%, the steepest annual fall of any size band.

ONS notes that feedback from its Vacancy Survey suggests some small firms are not recruiting because of increases in labour costs and other operating expenses.

Whether that translates into fewer apprenticeship opportunities is the open question. Micro and small employers withdrawing from hiring at this rate is not obviously compatible with growth in starts, but the vacancy survey does not distinguish apprenticeship vacancies from any other kind, and DfE starts data will be the place that shows up if it does.

Private sector pay is flat in real terms

Annual growth in average earnings was 3.5% for regular pay and 4.1% for total pay. In real terms, adjusted using CPIH, that was 0.5% for regular pay and 1.1% for total pay.

That positive headline conceals a split. Public sector regular pay grew 6.1% on the year, lifted by NHS pay rises being paid earlier in 2026 than in 2025. Private sector regular pay grew 2.8%, the lowest rate since August to October 2020, when it was 2.4%.

CPIH averaged 2.9% across April to June 2026. ONS does not publish a real terms earnings figure broken down by sector, so this is an approximate comparison rather than a published statistic, but on those numbers private sector regular pay was flat to very slightly negative in real terms over the quarter. The positive headline figure of 0.5% is being carried almost entirely by the public sector.

For anyone weighing up whether moving into work or retraining pays, that is the relevant number, and it is not the one in the headline.

After the public sector, the strongest regular pay growth was in wholesaling, retailing, hotels and restaurants at 3.5%. Construction was the weakest, down 0.1% on the year.

The headline indicators

The UK employment rate for people aged 16 to 64 was 75.1% in April to June 2026, down 0.2 percentage points on the year but up 0.1 on the quarter, with 34.47 million people in employment.

The unemployment rate for people aged 16 and over was 4.9%, up 0.2 percentage points on the year but down 0.1 on the quarter, with 1.77 million people unemployed, 88,000 more than a year ago.

The economic inactivity rate for people aged 16 to 64 was 20.9%, largely unchanged on both the year and the quarter, with 9.11 million people economically inactive.

The Claimant Count for July 2026 fell on both the month and the year to an estimated 1.665 million.

Payrolled employees fell by 78,000 (0.3%) between June 2025 and June 2026. The early estimate for July 2026 was 30.3 million, down 94,000 (0.3%) on the year. Payrolled employee numbers have been falling for around two years.

Redundancies stood at 3.6 per thousand employees, unchanged on the year and down on the quarter.

A change in how these statistics are classified

On 11 August 2026, following a request from the ONS, the Office for Statistics Regulation agreed that labour market statistics based on the Labour Force Survey and the Annual Population Survey should be designated as official statistics, moving out of the official statistics in development category they have occupied since the LFS quality problems of 2023.

This is not a return to accredited status. The ONS has confirmed it will not seek reaccreditation for LFS and APS outputs at all, and is instead prioritising the Transformed Labour Force Survey, the online first replacement, for accreditation at the earliest opportunity. In practical terms the LFS is being managed towards retirement rather than restored, and users should expect the TLFS to become the reference series.

Response levels have improved in the meantime. The LFS achieved sample rose to 81,193 individuals in April to June 2026, up from 80,078 in the previous quarter and now close to pre pandemic levels.

What this means for the sector

The unemployment rate has barely moved for a year, and that stability is doing a lot of work to disguise what sits underneath it. Vacancies are at a decade low outside the pandemic, the smallest employers are retreating from hiring fastest, and private sector pay growth has fallen behind inflation while the public sector figure props up the national average.

For colleges and training providers that combination narrows both ends at once, the destinations learners are being prepared for and the employer base willing to take them on. The immediate policy question is whether the cost pressures small employers are reporting to the ONS Vacancy Survey get addressed, and whether the Guaranteed Hours proposals land in a form that keeps entry routes open rather than closing them.

Sector reaction

Stephen Evans, chief executive at Learning and Work Institute, said:

“The labour market is relatively flat overall. The bigger picture is that 3.9 million people are out of work and say they want a job, up by 600,000 compared to two years ago. Worryingly, employment in retail and hospitality is down most sharply, contributing to the 1.3 million young people not in work or full-time education, up one third since the pandemic. A growing economy is needed to restart the stalled engines of job growth, alongside offering people who are out of work more help to find jobs.”

Ben Harrison, Director of the Work Foundation at Lancaster University, said:

“Today’s figures indicate the UK remains trapped in a deepening jobs drought. Vacancies have fallen to the lowest level outside of the Covid-19 pandemic since 2014, and young people are facing some of the toughest conditions for finding work in more than a decade.”

“Our research suggests the slowdown in hiring is particularly impacting young people. Over the last year, the decline in starter jobs has been 1.6 times faster than for other vacancies, making it increasingly difficult for young people to get their first foothold in work.”

Maxine Bligh, Chief Membership and Innovation Officer at the REC, said:

“Today’s data shows a job market in need of a confidence boost to get momentum going and for vacancy and inactivity rates to show more marked improvement. Employment and economic inactivity are broadly moving in the right direction but it is clear that many employers are still worried about the cost of hiring and rising operating costs.”

Abigail Coxon, Principal Economist at Youth Futures Foundation, comments: 

“Today’s ONS Labour Market statistics reveal that around 1 in 7 (466,000) 16-24 year olds not in full-time education are unemployed. Further, around 1 in 5 (846,000) young people not in full-time education are economically inactive. Compared with a year ago, both unemployment and economic inactivity have increased among young people not in full-time education, with around 50,000 more young people unemployed and 40,000 more economically inactive.

“Government has given welcome policy attention, including through the Youth Guarantee some and apprenticeship reforms. However, as these latest figures demonstrate, the scale and stubbornness of the youth unemployment and inactivity challenge requires more ambition.

“With Alan Milburn’s final report on young people and work due to publish its recommendations this Autumn, there is an important opportunity to further build an integrated system support offer across employment support, labour market, health, skills, youth policy and more for young people.

“As our Youth Employment 2025 Outlook reveals, the potential gains for our young people and the economy are enormous. If the UK matched the Netherlands’ youth participation rate, approximately 567,000 more young people would be in work or education, boosting the long-term economy by as much as £86 billion.”