This means that workers in the public sector have experienced fairly strong real wage growth of 3.1% over the past year. But workers in the private sector have seen their wages * fall * in real terms over the past year, with real wage growth standing at –0.1%.

But beneath the surface, there's a big difference in the wage story in the public and private sectors. Wage growth in the public sector (6.1%) is much higher than in the private sector (2.8%) - though year-on-year public sector pay growth is affected by variations in the timing of pay awards.

Turning to pay, and nominal pay growth was also fairly flat. Across the economy as a whole, nominal pay growth stood at 3.5%, barely changed from last month's figure (3.4%). This means that real wages continue to stay just above inflation, with average wages increasing by 0.5% in real terms.

This meant that the employment rate we calculate based on administrative data has continued to fall. It stood at 73.1% in Q2 2026, down from 73.1% in Q1 2026 and well below its recent peak of 76.5% in early 2023.

Payrolled jobs were also more or less flat on the month (a marginal fall of 13k). But more generally the ongoing payrolled jobs has picked up pace over the course of this year – the economy lost 39k jobs in Q2 of this year compared to 8k in Q1, a rate of change more similar to early 2025.

There wasn’t much change in the employment data this month. The unemployment rate stood steady at 4.9%, with a lot of volatility in the underlying single-month figures.

Indeed, when we compare single month pay estimates for February 2025 and 2026, workers’ pay has actually decreased by 68p a week. After just three years of real pay growth following the last cost of living crisis, workers look set to be entering another period of shrinking pay packets.

But while this might reduce the chances of a wage-price spiral, it's bad news for workers whose real wage growth is diminishing. After factoring in inflation, wages grew by 0.2% in the year to Feb. Any further weakening in nominal pay – or uptick in inflation – will turn real wage growth negative.

Turning to pay, and wages are continuing to weaken. Across the economy as a whole, wages rose by 3.6% in the year to February, and by just 3.2% in the private sector. Again, this is very different to the picture in 2022 when Russia invaded Ukraine – back then, private sector wage growth was 4.9%.

Overall, the lab mkt is far looser than when Russia invaded Ukraine. This means one silver lining going into this energy price shock: in 2022 workers responded to inflation by demanding higher wages, driving up inflation further and contributing to interest rate rises. That’s less likely this time.

There's also been a small fall in unemployment for 16-24-year-olds, which declined by 0.2 ppts, to 15.8%. But youth unemployment is still persistently higher than the unemployment rate across all ages, with a gap of 10.9 ppts.

But this month there was a surprise fall in the unemployment rate, which fell from 5.2% in the three months to Jan to 4.9% in the three months to Feb. That’s been driven by a 0.8 ppt drop in the single-month rate over the last two months(!), potentially indicating volatility in the underlying data…

The big picture is that the labour market has been cooling for over a year now – but the very latest data is mixed. Payrolled employment has resumed its gradual decline (down by 11,000 in March and 6,000 in February), and RF’s employment rate estimate has also continued to fall.

Financial penalties are also too low to deter non-compliance. Penalties for min wage underpayment are only up to 2x the arrears owed, and half of cases are ‘self-corrected’ and attract no penalty at all. We recommend increasing penalties to up to 4x the arrears owed.

The FWA’s budget (announced today) will be around a quarter higher in real terms than its predecessors. This is welcome, as the UK falls well short of international benchmarks for inspector numbers, but comes in the context of its remit expanding – so the Government should keep this under review.

The creation of the FWA marks a step change in the UK’s approach to enforcing workers’ rights, reducing fragmentation and bringing the UK more into line with international practice. It’ll be a single point of contact for workers and employers alike, and enable better information sharing.

Enforcement reform is much needed. It’s hard to know exactly how much unlawful behaviour exists, but survey data suggests that 445,000 jobs pay below the minimum wage, 2.2m jobs come with no paid annual leave, and 1.4m workers don’t receive a payslip.

Taking a step back reveals an even bleaker picture. After accounting for inflation, average weekly wages are just £31 above their pre-financial crisis peak – a massive £281 below where they would have been if wages had continued to grow at their pre-crisis rate.

This is bad news for workers: weekly earnings rose by just just £4.98 in real terms over the 12 months to November 2025 – barely enough to cover the cost of a high-street meal-deal.

Economy-wide nominal wage growth remained strong – at 4.5% in the year to November 2025. But with inflation still above the 2 per cent target, this means that regular wages have grown by just 0.6% in real-terms in the 3-months to November compared to last year.

On pay, there's some evidence that wage growth may gradually be picking up the pace. Annual growth in private sector nominal wages continued to fall – but looking at a shorter-term measure (the annualised 3-month change), private sector pay growth ticked up to 3% between Jun-Aug and Sep-Nov 2025.

On the slightly more positive side, however, vacancies have stopped falling - which, together with the fact that the unemployment rate is essentially unchanged on the previous month, suggests that unemployment could have peaked for the time being, albeit at too high a level.

And it’s worth remembering that all of the fall in employment relative to pre-Covid has been driven by unemployment, not inactivity – the UK lacks jobs, not just jobseekers. See our Q4 2025 Labour Market Outlook for more: www.resolutionfoundation.org/publications...

This means that the 16-64 employment rate we calculate based on admin data and population estimates is now at 75.3%, down from a high point of 76.6% in 2023. The unemployment rate remained at 5.1%, not far off its Covid peak of 5.3% and otherwise the highest in almost a decade.

This month we saw another fall in payrolled employment. The number of employees fell by 33,000 in November and a further 43,000 in December according to HMRC PAYE data (though the latter is likely to be revised) and is down by 184,000 on the year.

When we take a longer view, the picture is not much brighter. Average weekly wages are just £30 above their pre-financial crisis peak in real terms – and a whopping £280 below where they would be if wages had kept growing at their pre-crisis rate.

What does this mean for workers? Over the past 12 months, average weekly wages have grown by just £3.80 a week in real terms – barely enough to cover the cost of a cup of coffee from most high street chains...

Across the economy as a whole, nominal wages grew by 4.6% in the year to October 2025. But with inflation still well above the Bank of England's 2% target, this means that wages are barely growing in real terms. Real wage growth was just 0.5% over the past year.

Turning to pay, and we see more evidence of a weakening labour market. Private sector nominal wages have grown by 3.9% over the past year – but when we look at a shorter-term measure (the annualised three-month change), private sector pay growth is just 2.7%.

In fact, all of the employment fall since 2019 has been driven by unemployment, not inactivity. This is because the rise in health-related inactivity has been offset by falls in other forms of inactivity. Read more in our latest Labour Market Outlook: www.resolutionfoundation.org/publications...