Hiring weakened in January as UK vacancies dropped to their lowest level in five years and graduate postings slid to a record low

Hiring weakened in January as UK vacancies dropped to their lowest level in five years and graduate postings slid to a record low

UK Hiring Weakness Deepens as Vacancies Hit Five-Year Low

UK job vacancies fell to their lowest level in five years in January 2026, with graduate job postings reaching a record low, according to data from Adzuna. Employers advertised 694,940 roles, a 3.05% monthly decline that marks the worst reading since January 2021. Graduate vacancies plummeted 19.1% to below 10,000— a threshold not seen since Adzuna began tracking the metric in 2016.

The weakening labor market has intensified concerns about rising unemployment, which climbed to 5.2% in the past six months. Young workers are particularly affected, with youth unemployment reaching 14% in late 2025—the highest in five years. Andrew Hunter, co-founder of Adzuna, noted that while competition for roles remains high (2.4 jobseekers per vacancy), wage growth has continued, with average advertised salaries rising 5.98% year-on-year to £43,289. This outpaces the Bank of England's estimate for non-inflationary wage growth (3.25%).

Policymakers and economists have pointed to several factors driving the downturn. Labour's increases in the minimum wage and payroll taxes, alongside stricter employment rights, have raised labor costs for businesses. Simultaneously, automation and AI adoption are displacing entry-level roles, with such positions falling 4.46% in January. The shift toward technology-driven solutions has been accelerated by startups prioritizing cost efficiency.

Long-term productivity challenges further complicate the outlook. A Boston Consulting Group study highlighted that key UK industries—finance, manufacturing, retail—have lagged behind global productivity benchmarks for decades, exacerbating weak GDP growth. The proliferation of low-productivity small firms, despite technological advances, underscores the scale of the challenge.

While wage growth offers some relief for skilled workers, the data underscores a fragile labor market, with young jobseekers and entry-level roles bearing the brunt of structural shifts and policy pressures.