Bank of England Warns Low-Hire, Low-Fire Market Hurts Young People

Clare Lombardelli, the Bank of England’s deputy governor for monetary policy, warned that a low-hire, low-fire labour market is making it harder for young people to enter work.

By Career Ahead AI · United Kingdom — AI-assisted, fact-verified against cited sources. Readers should verify key facts.

Recruitment freezes make it harder to enter or move through work

Employers are holding on to existing staff while freezing new recruitment, creating the low-hire, low-fire pattern Lombardelli described. The arrangement protects people who already have jobs, but makes it harder for people trying to get into work or move on. Hiring and job security therefore look different depending on whether someone is already employed: existing staff are being retained, while people seeking a new role face a more difficult route in.^¹²³

The Bank says young people are bearing a particularly heavy share of the cost, because the first step into work has become harder. Lombardelli also described a rapid rise in the number of young people struggling to find jobs. That impact falls on those trying to begin working lives, even as employers retain staff already on their payrolls. The account identifies entry into work as a specific pressure point for young people.^¹²³

People are changing jobs less often, and those who do move are less likely to switch industry or take work that requires different skills.

People are changing jobs less often, and those who do move are less likely to switch industry or take work that requires different skills. That limits movement between roles as well as entry into employment. Lombardelli also warned that if jobseekers’ skills do not match the jobs available, rising unemployment may ease wage pressures less than it did in the past. The number of people out of work alone may therefore give a weaker signal about wage pressure when vacancies and jobseekers do not line up.^¹²

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Unemployment has risen while redundancies remain contained

The economy has proved more resilient to the recent energy cost shock than expected. Activity has held up better than anticipated, unemployment has risen only gradually and redundancies remain relatively low. Even so, the unemployment rate rose from below 4% in 2022 to a peak above 5% late last year. It now stands at 4.7% in the latest data for the three months to August, showing that gradual deterioration has still brought the rate above its earlier level.^²³

Unemployment rose for six consecutive quarters from mid-2024 to the end of 2025, but the total increase was only around one percentage point. The redundancy rate is roughly where it was before the pandemic. Taken together, those measures describe a labour market in which unemployment has climbed without a comparable rise in redundancies. The distinction helps explain the low-hire, low-fire pattern: employers are holding staff even as conditions for people seeking work have become harder.^¹²

Vacancies have fallen well below their pre-pandemic level, while the REC measure of labour demand remains contractionary, below 50. The vacancy figure tracks available openings; the REC measure provides a separate signal of labour demand. Both point to weaker hiring conditions. With fewer openings and employers freezing recruitment, people looking for work have fewer opportunities to match their skills to a job, reinforcing the difficulty of moving into employment or a different role.^¹²³

Energy costs and upcoming decisions add to the pressure

Lombardelli warned that the war in the Middle East has pushed up energy prices and worsened the economic outlook. The Bank produced its first post-conflict projections nine weeks after the conflict broke out. The energy shock is part of the economic backdrop to the labour-market warning, while the projections mark the Bank’s attempt to assess conditions after the conflict began. The recent resilience of activity has not removed the pressure from higher energy costs or the weaker outlook.^¹²³

The Bank is preparing for a live interest-rate decision next month, after raising borrowing costs last week for the first time in three years. The government was also awaiting a report on young people and work, expected next week. The rate decision and the government’s pending work report put monetary policy and youth employment in view at the same time, against a labour market where hiring has slowed and young people are finding it harder to get jobs.^¹²³

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With fewer openings and employers freezing recruitment, people looking for work have fewer opportunities to match their skills to a job, reinforcing the difficulty of moving into employment or a different role.¹²³

Your first job is now a steeper climb

If you are starting out, treat your first role as a strategic entry point, not a final choice. Employers are holding staff and freezing new recruitment, so openings are scarce and competition is intense. A job that builds transferable skills matters more than one that pays slightly more, because moving between industries or roles is harder when hiring is slow. Ask for training or mentorship in the interview, since your next move depends on what you learn now.^¹³

For those already employed, the low-hire, low-fire market means your current position is safer than it looks, but do not rely on it. Redundancies remain low, yet unemployment has climbed gradually, so the risk of a long search if you leave is real. Before quitting, check whether your skills match available vacancies, because poor matching weakens the usual wage pressure that comes with rising unemployment. Negotiate raises while you have leverage, as hiring freezes reduce your alternatives.^²