London Job Market Suffers Sharpest Decline as UK Vacancies Hit Post-Pandemic Low
The United Kingdom's employment landscape has experienced a significant contraction, with total job vacancies falling to their lowest point since 2021. According to data from the prominent job search platform Adzuna, the number of advertised positions dropped by 16 percent year-on-year in January, dipping below 700,000 for the first time in five years.
Capital City Faces Steepest Monthly Decline
London emerged as the region most severely impacted by this downturn, experiencing a 5.6 percent monthly decrease in hiring activity. The capital was closely followed by the East Midlands and North West England, where job openings declined by four percent compared to December figures.
Andrew Hunter, co-founder of Adzuna, commented on the concerning trend: "As economists point to ONS data that suggests hiring rates are levelling off, the live picture from advertised jobs tells a different story. Our January figures show hiring is approaching pandemic-era levels, and with graduate roles falling to a record low, this suggests the market is far from being on stable footing."
Graduate Opportunities Plummet Dramatically
The most alarming aspect of this employment contraction involves graduate positions, which have nearly halved year-on-year with a staggering 45 percent decline. Graduate vacancies fell below 10,000 for the first time since Adzuna began tracking this data in 2016.
This dramatic reduction in entry-level opportunities has contributed to youth unemployment reaching 16.1 percent, its highest level since 2014. For the first time, UK youth unemployment has climbed above the European Union average, signaling particular challenges for recent graduates and young professionals entering the workforce.
Wage Growth Provides Silver Lining Amid Hiring Slowdown
Despite the contraction in available positions, advertised salaries demonstrated resilience, growing six percent from January 2025 to reach an average of £43,289. This wage increase outpaced inflation, suggesting employers remain willing to compensate for specialized skills despite reduced hiring volumes.
Hunter noted some positive indicators within the broader employment picture: "For jobseekers in early 2026, the market remains challenging, with fewer vacancies and intense competition, but continued wage growth suggests employers are still willing to pay for the right skills."
Sector-Specific Variations and Policy Impacts
The technology sector maintained its position as the highest-paid industry, with average IT salaries climbing to £63,428 in January. Conversely, maintenance jobs experienced the most significant annual decline in compensation at three percent.
Recent policy developments have contributed to the hiring slowdown, with Labour's employment rights act facing criticism for increasing operational costs for British businesses. Chief financial officers at retail firms have indicated they may be forced to reduce staff as these employment reforms are implemented.
Hunter identified pockets of resilience within specific sectors: "We're seeing steady wage rises and strong labour growth in some sectors like teaching and cleaning, which suggests not all areas of the economy are experiencing the same level of contraction."
The overall employment picture reveals 694,940 total roles advertised in January, marking a three percent decrease from December. This contraction brings hiring activity closer to levels observed during the pandemic period, raising concerns about the stability of the UK's labor market recovery.
