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The latest ONS labour market data indicates that vacancies have fallen to their lowest level in normal times in more than a decade, as the UK’s jobs drought deepens. As the Government seeks to tackle persistent job insecurity, growing youth unemployment, and imbalanced regional growth, the challenge is not simply to create jobs – it’s to create the type of secure and sustainable jobs that can address the UK’s most pressing challenges.
This analysis considers the sectoral dimensions of our current employment slowdown. It looks at the sectors where jobs are being created and where they are being lost to identify policy opportunities for the UK Government as they aim to boost growth in every postcode.
Good work ‘in every postcode’?
It’s not all doom and gloom on employment in the UK. Sectors such as the creative industries and business services have continued to see consistent growth throughout the jobs slowdown, and professional services is on the verge of crossing the 3.5 million jobs threshold for the first time. Construction, a key priority for a Government promising to get Britain building again, is poised to finally return to pre-COVID levels; while desperately needed jobs growth in health and social care is similarly welcome. Together, these form of a cluster of sectors that have seen real and sustained progress in job creation in the post-COVID era.
Figure 1: Growth in employment vs Whether Employment growth is speeding up or slowing down, major sectors, Q1 2026
Source: Work Foundation analysis of ONS Labour Market Summary Statistics Table A01 (August 2026). Chart considers year-on-year growth in workforce jobs from Q1 2025 to Q1 2026, and the change in YOY growth relative to growth between Q1 2024 and Q1 2025. Bubble sizes reflect total employment in each sector.
Some of these growth areas are a template for the types of work the UK Government should aim to create: secure, well-paid work that contributes to our collective social priorities. But others, such as social care or parts of the creative industries, can be home to concentrations of insecurity, with jobs failing to offer things like guaranteed hours or decent wages.
Indeed, outside of the growth in public sector employment, there is an awkward mismatch with the Prime Minister’s promise to provide access to good jobs in every postcode. That’s because many parts of the country will barely feel the benefits of rising employment in the types of business services that are not in their town. But they will keenly feel the continued shedding of employment in the foundational economy, where the retail sector has lost 400,000 jobs since 2019, pushing the sector’s employment numbers down to levels last seen in 1994.
The Prime Minister has put manufacturing growth squarely back on the agenda, positioning it as a way to counter the decline in local economies and high streets in places with few alternatives. But the latest labour market statistics reveal that the sector is continuing its long decline and accounts for below 2.5 million UK jobs for the first time. And more recent strains, like an acceleration of job losses in information and communications, will deepen growing concerns that wider adoption of automation and AI may aggravate existing unemployment strains.
Good work at every age
The clustering of job losses in foundational sectors and manufacturing poses a daunting challenging, because these sectors play an important structural role beyond simply creating jobs. The jobs created in sectors like retail are essential anchors for small cities and towns. In addition, they provide stepping stones for young people to transition into work, with one in three young people employed in retail or hospitality. But they are also home to many insecure jobs, including those that don’t offer guaranteed hours.
Today’s labour market data indicates a near-record 1.23 million workers are on zero-hour contracts, with many of these clustered into sectors like retail that are already under strain. Recent Work Foundation research revealed the strain these contracts have on workers, leaving workers without guaranteed hours, and helping to push a record 359,000 workers into underemployment.
Without decisive reforms to these kinds of contracts, the thinning out of secure and sustainable job opportunities may mean an increasing number of young people face a choice between precarious work or exiting the labour market altogether.
Good work guarantees
Government urgently needs a credible programme of support to turn around the foundational economy. This must avoid compromises on efforts to end zero-hour contracts and make work pay. The prevalence of this kind of insecurity has not slowed job losses, and most of the strain on these sectors predate recent policy changes.
Instead of succumbing to pressure and rowing back on key employment rights reforms, the focus must be on rebuilding the household spending power upon which foundational services rely on to grow. Interventions like Job Guarantees can provide a direct response to pressing issues like youth unemployment, while creating the types of boosts to household income that get people spending on their high streets again.
Local economies drifting away from creating the right types of jobs for every place and person won’t suddenly change course. If the trends observed in this quarter’s ONS labour market stats are to be addressed, Government must lead in supporting the creation of jobs that work for those people and places all across the country.
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