Labour's not working: Private sector jobs and vacancies keep falling as wages stall against inflation… but public sector keeps booming

Some 26,000 jobs were lost in August, and a measure of wage growth collapsed to the slowest pace in six years as the labour market weakens.The worst-hit industries were the leisure and hospitality sectors as well as small businesses, new Office for National Statistics (ONS) figures show.Liz McKeown, director of economic statistics at the ONS said: 'Smaller businesses are continuing to report that increased labour costs are affecting hiring decisions'.It comes after Keir Starmer's Labour increased the minimum wage in April and employers' National Insurance contributions last April under Rachel Reeves's budget.As a result, job vacancies have now fallen to a fresh five-year low in the three months to June, with around 8,000 fewer being advertised compared to the same period in 2025, bringing the total on the market to 702,000.This remains the lowest since spring 2021, or, outside the Covid pandemic years, for over a decade.Average earnings, including bonuses, rose by only 3.9 per cent in the three months to July, official figures show, marking the most feeble growth since November 2020.The private sector has been keenly hit by this sluggish economic growth, as earnings excluding bonuses fell to 2.9 per cent. Meanwhile, public sector pay has risen at a rate of 6.3 per cent.Total wage growth stood at 3.9 per cent, down from 4.2 per cent in the three months to June. The rate of unemployment in the UK remained stagnant and unchanged at 4.9 per cent in the same period, the ONS said.August's 26,000 recorded job losses were more than double the 10,000 forecast for the month by economists. It brought the total of those employed down to 30.2 million.A further 19,000 people lost their jobs in July, adding to a total of 39,000 job losses over the last three months.Shadow Chancellor of the Exchequer, Andrew Griffith MP said: 'Under Labour, job vacancies are at their lowest level in a decade outside the pandemic, 101,000 payrolled jobs have been lost over the past year, and the claimant count is surging.'Labour is, and always has been, the party of unemployment.'Businesses are still absorbing the cost of Angela Rayner's disastrous (Un)Employment Rights Act, and Labour's refusal to rule out more tax rises is causing huge uncertainty for employers.'Only the Conservatives have a plan to get Britain working again. We'll cut the red tape that makes it harder for employers to hire and deliver the lower, simpler taxes our country needs.'The UK's labour market has been shrinking for the past two years, recording rising unemployment while fewer employers are hiring, as 16,000 fewer job vacancies were advertised since the start of the year.The Bank of England is expected to keep borrowing costs unchanged at 3.75 per cent on Thursday.The decision will come after official inflation figures are released tomorrow. Economists expect inflation to have gone up from 2.9 per cent to 3.1 per cent, mainly due to rising oil and gas prices.Thomas Pugh, chief economist at RSM UK, said that despite ongoing weakness, the statistics show signs of stabilisation in the jobs market, which may give the Bank room to increase rates to combat inflation in the coming months.He said: 'The Monetary Policy Committee (MPC) has so far relied on the weakness of the labour market as cover for keeping rates on hold, but that position looks increasingly difficult to hold if the labour market stabilises and inflation rises to around 4%.'We still expect the MPC to hold rates on Thursday, but a rate hike as early as November is now looking much more likely.'Work and Pensions Secretary Pat McFadden said the ONS figures 'show a labour market that remains resilient in the face of significant global economic pressures'.'But we know there is more work to do, particularly to ensure young people gain the skills, experience and confidence needed to succeed,' he added.