OCDE - OECD Employment Outlook 2026 United Kingdom

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OECD EMPLOYMENT OUTLOOK 2026: UNITED KINGDOM © OECD 2026

These country notes provide an overview of the labour market situation in each country based on data from OECD Employment Outlook 2026. This edition has a special focus on geographic disparities in jobs and incomes. Labour markets remain resilient but show further signs of weakening The OECD labour market remains resilient, with employment and labour force participation rates at record highs (72.1 and 76.7% in Q1 2026 on average across countries, respectively) a nd unemployment low by historical standards (4.9% in May 2026). However, there are increasing signs of weakening, including rising unemployment in many countries, slowing employment growth, and easing labour shortages. Due to the new surge in energy prices, real wages are expected to fall in many countries. • The UK labour market remains resilient by historical standards, but signs of weakeni ng have become more visible. The unemployment rate stood at 5.0% i n February 2026 in line with the OECD average of 4.9%, but 0.5 percentage points (p.p.) higher than a year earl ier. Employment remains high, with the employment rate at 75.0% in Q1 2026, unchanged from a year earlier, while labour force participation has improved slightly from 77.9% in Q1 2024 to 79.1% in Q1 2026. • Labour shortages in the United Kingdom have eased markedly since their pos t-pandemic peak. The vacancies-to-unemployed ratio rose sharply in 2021 and 2022, reflecting exceptionally tight labour-market conditions, but has since fallen back and was below its Q4 2019 level by Q4 2025. This suggests that recruitment difficulties have not only moderated from their post-pandemic highs, but are now less acute than before the pandemic, as there are fewer vacancies per unemployed person than in late 2019. • Real wage growth has slowed in the United Kingdom. In Q1 2026, real wages were around 0.8 %

but are now less acute than before the pandemic, as there are fewer vacancies per unemployed person than in late 2019. • Real wage growth has slowed in the United Kingdom. In Q1 2026, real wages were around 0.8 % higher than a year earlier, compared with an annual increase of almost 2% in Q3 2024. This moderation in real wage growth is in line with the wider OECD pattern of slowing real earnings growth. Despite this slowdown, UK real wages were around 3.6% higher than in Q1 2021. Projections from the latest OECD Economic Outlook show that renewed inflationary pressures are expected to squeeze real incomes, suggesting that recent real wage gains may remain fragile. United Kingdom2 

OECD EMPLOYMENT OUTLOOK 2026: UNITED KINGDOM © OECD 2026

Unemployment rates remain low Unemployment rate (percentage of labour force), seasonally adjusted

Note: The latest month refers to February 2026 for the United Kingdom, and June 2026 for the United States.

Source: Chapter 1 in OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, https://doi.org/10.1787/7e710f54-en.

Real wage growth is slowing down while real wages remain below Q1 2021 levels in one-third of OECD countries Change in real hourly wages, Q1 2026 or latest

Note: “OECD” is the median of 37 OECD countries (not including Colombia).

Source: Chapter 1 in OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, https://doi.org/10.1787/7e710f54-en. 3

OECD EMPLOYMENT OUTLOOK 2026: UNITED KINGDOM © OECD 2026

People’s employment prospects are shaped by where they live Regional disparities in labour market outcomes are large across the OECD. In over half of OECD countries, employment rates across small regions vary by more than 20 p.p. These dispa rities do not simply reflect

People’s employment prospects are shaped by where they live Regional disparities in labour market outcomes are large across the OECD. In over half of OECD countries, employment rates across small regions vary by more than 20 p.p. These dispa rities do not simply reflect differences in who lives where, but also in the economic opportunities that regions have to offer, an d they translate directly into disparities in living standards. • In the United Kingdom, regional disparities in employment rates are somewhat greater than in most OECD economies: the gap between regions in the top and bottom quintiles of employment rates stands at 13.4 p.p., compared to an average of 11.4 p.p. The overall range is wider still, with employment rates varying from around 62% in Wolverhampton to around 86% in the Orkney Islands. This points to particularly weak employment outcomes in some local labour markets, even though the United Kingdom also has regions with very high employment rates. • Regional labour market disparities in the United Kingdom are more persistent than in mo st OECD countries. While low-employment regions have been catching up in most OECD c ountries since the early 2010s, there has been little such convergence in the United Kingdom. This suggests that regional labour market disparities in the United Kingdom are relatively en trenched, and that national labour market strength does not automatically translate into improved employ ment prospects across all parts of the country. Regional disparities in employment are large in most OECD countries Employment rates across small regions, 2024 or latest available year

Source: Chapter 2 in OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, https://doi.org/10.1787/7e710f54-en.

Non-compete clauses are widespread beyond high-skill occupations Non-compete clauses – contract terms that prevent workers from moving to a competitor or starting a competing business – and related contractual restrictions are widespread across OECD labour markets.4 

OECD EMPLOYMENT OUTLOOK 2026: UNITED KINGDOM © OECD 2026

Non-compete clauses – contract terms that prevent workers from moving to a competitor or starting a competing business – and related contractual restrictions are widespread across OECD labour markets.4 

OECD EMPLOYMENT OUTLOOK 2026: UNITED KINGDOM © OECD 2026

They covered about 20 to 30% of workers in 2025, and are increasingly used beyond highly specialised jobs. While firms may use such clauses to protect trade secrets or investments, ev idence suggests they can reduce job mobility, weaken wage growth, slow knowledge diffusion and undermine produc tivity growth. • Between 15% and 28% of private-sector employees are currently bound by a non-comp ete agreement, compared with an OECD-country average of around 20% to 30%. Firms in the United Kingdom report an upward trend, suggesting that reliance on contractual restr ictions may be growing in the British labour market. • These clauses are not confined to workers for whom the traditional rationale is stro ngest, such as those with access to sensitive business information or substantial firm-spec ific investment. In the United Kingdom, between 8% and 18% of workers with no access to confidential information nonetheless report having signed a non-compete, as do between 7% and 18% of low-paid workers. This raises questions about whether such clauses are always economically jus tified, since unnecessary restrictions on job switching can reduce labour mobility, w eaken wage growth and slow productivity-enhancing reallocation across firms. • Restrictive labour-market practices also extend beyond non-competes. About 36% of surveyed UK firms report knowledge of no-poaching agreements, wage-fixing arrangements, or bo th, occurring in their industry. While this is below the cross-country average of 48%, it stil l suggests that anticompetitive practices are widespread in the UK labour market. Share of employees bound by non-compete clauses as reported by employers

Source: Chapter 5 in OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, https://doi.org/10.1787/7e710f54-en.

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competitive practices are widespread in the UK labour market. Share of employees bound by non-compete clauses as reported by employers

Source: Chapter 5 in OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, https://doi.org/10.1787/7e710f54-en.

Contact Andrew AITKEN ( andrew.aitken@oecd.org) Mark PEARSON ( mark.pearson@oecd.org) 5

OECD EMPLOYMENT OUTLOOK 2026: UNITED KINGDOM © OECD 2026

This work is issued under the responsibility of the SecretaryGeneral of the OECD, and does not necessarily reflect the official views of OECD Member countries. This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Note by the Republic of Türkiye The information in this document with reference to “Cyprus” relate s to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Türkiye recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable so lution is found within the context of the United Nations, Türkiye shall preserve its position concerning the “Cyprus issue”. Note by all the European Union Member States of the OECD and the European Union The Republic of Cyprus is recognised by all members of th e United Nations with the exception of Türkiye. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.

The full book is available in English: OECD (2026), OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, OECD Publishing, Paris,

The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.

The full book is available in English: OECD (2026), OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, OECD Publishing, Paris, https://doi.org/10.1787/7e710f54-en.

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OECD 2026

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