Youth unemployment hits 11-year high as Labour tax rises bite

Chris Price

Tue, May 19, 2026 at 8:53 AM EDT 22 min read

Youth unemployment has hit an 11-year high under Sir Keir Starmer as Labour’s tax raid hits the jobs market.

The number of people aged 16 to 24 out of work has climbed to 16.2pc, its highest level since January 2015, according to the Office for National Statistics.

The overall unemployment rate rose to 5pc, up from 4.9pc in the three months to February, while the number of people on payrolls plummeted at their sharpest pace since the first Covid lockdown.

Payrolls shrank by 100,000 between March and April to 30.2 million.

Bosses have blamed Labour’s decisions to put up the minimum wage and National Insurance contributions for forcing them to turn away from hiring young people.

Wage growth also fell to its weakest level in six years in a sign that living standards will come under pressure over the Iran war.

Average regular pay growth dropped to 3.4pc in the first three months of the year, according to the Office for National Statistics.

It was its lowest level since the height of the pandemic in October 2020.

Meanwhile, the number of job vacancies dropped by 28,000 in the three months to April to a five-year low of 705,000.

The decline in wage growth and vacancies comes as households face increasing price pressures from the Iran war.

Inflation is forecast by the Bank of England to exceed 6pc later this year under its worst-case scenario, as the Middle East conflict pushes up prices of oil, gas and fertilisers used for food.

However, data on Wednesday is expected to show inflation rose at a slower pace in April due to the falling Ofgem energy price cap.

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01:52pm

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Thanks for following our coverage of the latest employment figures, showing youth unemployment at an 11-year high and vacancies dropping to a five-year low.

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01:15pm

Real household income to suffer worst drop in four years

Real household income will have its worst year since Russia’s invasion of Ukraine in 2022 as rising price pressures squeeze family finances, economists have warned.

Real post-tax salaries per employee will fall by 1.7pc this year, before contracting a further 0.8pc in 2027, according to Oxford Economics.

Households will resort to spending their savings as they struggle to secure stronger pay rises to mitigate the impending inflation shock, according to senior economist Edward Allenby.

He said: “Labour market conditions are already relatively loose and unemployment is likely to rise further as intense cost pressures and weak consumer demand weigh on private sector hiring and support from public sector job creation wanes.