Volatile labour market delivers real wage falls in the private sector since October 18 June 2026 The economic volatility of recent months has been reflected in the UK labour market with real regular pay in the private sector falling since October and the number of self-employed jobs and zero-hours contracts rising far quicker than regular employment, the Resolution Foundation said today (Thursday). The latest ONS data showed a mixed picture for the labour market – with unemployment nudging down to 4.9 per cent. But, having had lower unemployment than the G7 average back in January 2022 (3.9 vs 4.4 per cent), the UK now has higher unemployment (4.9 vs 4.5 per cent). The number of payrolled jobs in the economy continues to decline – down 65,000 between February and April – though the flash estimate for May suggests a levelling off. The latest data shows that the nature of work across Britain is changing too. Between December 2025 and March 2026 an astonishing 177,000 self-employed jobs were created – accounting for over two-thirds of the increase in jobs in that period. While this figure may be revised down, it is not the only example of growing irregular work. Over the past year, the number of people employed on zero-hours contracts has grown by 5.6 per cent – more than four times faster than overall employment (1.2 per cent). While real average weekly earnings continued to grow by 0.1 per cent in the three months to April, pay growth has been far weaker in the private sector where real wages have been falling since October 2025. With inflation expected to rise over the coming months, private sector workers will need to brace themselves for this squeeze to continue. Louise Murphy, Senior Economist at the Resolution Foundation, said: “The UK labour market is weaker than it has been in recent years. This weakness is showing up through rising irregular work in the form of self-employment and zero-hours contracts, higher youth unemployment and lower wage growth. “The real wages of private sector workers have now been falling since last October. With further inflation rises expected over the coming months, these workers should brace themselves for this squeeze to continue over the summer.”
