Working with large volumes of job-related data gives Sercanto visibility into how recruitment patterns and candidate expectations are changing.
In 2026, the UK labour market looks very different from the exceptionally tight conditions seen a few years ago. Hiring demand has weakened, vacancies have fallen and unemployment has risen, while employers continue to face pressure from inflation, skills gaps, flexible-working expectations and rapid adoption of artificial intelligence.
Last Updated: 24.08.2026
Sercanto’s Outlook on the UK Job Market for 2026
1. Inflation And Pay Pressures
Inflation remains an important issue for UK employers and workers, although the situation is very different from the sharp price rises experienced in 2022. UK Consumer Price Index inflation reached 2.9% in July 2026, up from 2.6% in June.
Pay growth has also moderated. Regular earnings increased by 3.5% annually in April to June 2026, while private-sector regular pay growth was 2.8%. Employers therefore need to balance competitive salaries with tighter operating costs and a less buoyant recruitment market.
2. Hybrid And Remote Working Remain Established
Hybrid working has moved from a temporary pandemic response to an established part of the UK employment market. The latest ONS analysis found that 28% of working adults in Great Britain hybrid worked between January and March 2025.
Flexible working remains particularly important in professional and higher-paid occupations. Employers increasingly need to consider how office attendance, collaboration, productivity and employee flexibility can work together rather than treating remote working as an all-or-nothing arrangement.
3. Mental Health And Workplace Wellbeing
Employee wellbeing remains a significant workforce issue rather than simply a legacy of the COVID-19 pandemic. Health and Safety Executive figures show that 964,000 workers experienced work-related stress, depression or anxiety in 2024/25, resulting in an estimated 22.1 million working days being lost.
Employers therefore have strong reasons to focus on manageable workloads, supportive management, clear communication and access to appropriate wellbeing support as part of their long-term workforce strategy.
4. Skills Shortages In A Cooler Hiring Market
The UK is no longer experiencing the same widespread shortage of candidates described in the original 2023 article. ONS data for May to July 2026 estimates around 707,000 vacancies, while there were approximately 2.5 unemployed people for every vacancy.
However, this does not mean skills shortages have disappeared. The UK Employer Skills Survey found that skill-shortage vacancies represented 27% of all vacancies in 2024.
Employers can therefore face a weaker overall hiring market while still struggling to recruit people with particular qualifications, technical knowledge or experience.
5. AI And Digital Skills Are Reshaping Recruitment
Artificial intelligence has become one of the most important structural changes affecting the UK labour market. Indeed reported that 9.4% of UK job postings mentioned AI or related technologies by the end of June 2026, the highest level recorded in its data.
Demand is particularly strong in areas such as data, software and technology, but AI requirements are also appearing increasingly in marketing, finance, management and other professional roles.
For candidates, developing practical AI and digital skills could therefore become increasingly important, while employers may need to invest more heavily in training existing staff.
Conclusion
The UK labour market in 2026 presents a more complex picture than it did in 2023. Overall recruitment demand has weakened, but employers still face challenges involving specialist skills, employee wellbeing, flexible working and changing salary expectations.
At the same time, AI is altering the skills businesses expect from candidates and existing employees. For recruitment platforms such as Sercanto, following these changes closely will remain important as employers and jobseekers adapt to a labour market that is becoming increasingly technology-driven and skills-focused.
Frequently Asked Questions
What Is The UK Unemployment Rate In 2026?
The estimated UK unemployment rate was 4.9% in April to June 2026, according to the latest ONS labour-market figures.
Are UK Job Vacancies Falling In 2026?
Yes. ONS estimates put UK vacancies at approximately 707,000 during May to July 2026, around 2.7% lower than a year earlier.
Is UK Inflation Still Affecting Salaries?
Yes. CPI inflation was 2.9% in July 2026, while employers are also dealing with wider labour and operating costs when setting salaries.
Is Hybrid Working Still Common In The UK?
Yes. The latest detailed ONS analysis found that 28% of working adults in Great Britain were hybrid working in early 2025.
Does The UK Still Have A Skills Shortage?
Yes, although shortages are more concentrated than during the post-pandemic recruitment boom. Recent government evidence shows that skill-shortage vacancies remain a significant part of the market.
How Is AI Affecting The UK Job Market?
Employers are increasingly asking for AI-related capabilities, with AI appearing in a record share of UK job advertisements during 2026.
What Skills Will Be Important For UK Workers In 2026?
Digital literacy, AI capability, specialist technical knowledge and adaptable interpersonal skills are becoming increasingly valuable as employers change the way they recruit and organise work.
