The decline has been driven largely by smaller businesses scaling back recruitment, with rising labour and operating costs making it more expensive to hire. Businesses have pointed to higher energy costs, National Insurance and the minimum wage as contributing factors.
The figures also show that private sector pay growth has slowed to 2.8%, its weakest rate in almost six years, while overall regular earnings grew by 3.5% year-on-year.
Meanwhile, the unemployment rate remained at 4.9%, while the number of payrolled employees fell by 13,000 in June, with early estimates suggesting a further 13,000 decline in July.
The latest figures suggest employers are becoming increasingly cautious about hiring as they navigate rising costs and economic uncertainty, while greater automation may also be affecting some entry-level roles.
Sheila Flavell, CBE, COO of FDM Group: “Underemployment is becoming a growing concern for the UK economy. We’re seeing highly capable graduates entering roles that don’t fully utilise their skills, which ultimately slows productivity and limits long-term growth. This reveals a misalignment between academic curriculum and what employers actually need.”
“We are increasingly seeing a rising number of young people coming out of university with a degree, and unable to secure an entry-level job within their field. By bridging the gap between education and employment, graduates can find jobs in high-demand sectors, such as tech and finance, making full use of their talent.”
