UK Wages Rise 5.2% as Labour Market Stays Resilient Despite Employer NI Rise

UK average earnings grew 5.2% in the three months to February 2026, according to ONS data released Tuesday, beating City forecasts of 4.8% and suggesting that the labour market remains more resilient than many expected following last autumn's increase in employer National Insurance contributions.

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The Labour Market Picture

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Employment rose by 128,000 in the latest quarter, against a forecast of 80,000. The unemployment rate held steady at 4.3%. The number of job vacancies fell slightly, to 875,000, but remains above pre-pandemic levels.

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The Wage-Inflation Risk

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Wage growth of 5.2% — well above the 4% the Bank of England considers consistent with 2% inflation in the medium term — complicates the picture for rate-setters. Even as headline inflation falls, persistent wage growth risks feeding through into services prices and keeping underlying inflation elevated.

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The Bank's Chief Economist noted that the data "cut both ways" — healthy employment and wages were good news for households, but the pace of wage growth was incompatible with sustained return to the inflation target.

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Sector Variations

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Wage growth is not uniform. Private sector earnings are growing at 5.6%; public sector at 4.1% following this year's settlements. Within the private sector, the strongest growth is in technology and professional services; the weakest is in retail and hospitality, where the minimum wage increase has driven up the floor but left less room for growth above it.

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