Northern Ireland’s labour market is “losing momentum” despite boasting the United Kingdom’s lowest unemployment rate, according to official statistics published by the Northern Ireland Statistics and Research Agency (NISRA). The Labour Market Report for April 2026 reveals a complex picture: while the number of payrolled employees has risen slightly over the year, the employment rate has dipped, economic inactivity has climbed, and confirmed redundancies are running at levels one third higher than the previous year.
The data, released on 21 April 2026 by the Department for the Economy, covers the period to February 2026 for survey-based measures and March 2026 for administrative data. It captures the immediate prelude to the conflict in Iran, which began on 28 February 2026, meaning the full economic shock of rising energy costs and global uncertainty has yet to appear in the figures.
Key Findings from the Latest Data
The headline figures present a labour market that appears stable on the surface but shows signs of strain beneath:
- Payrolled employees: 819,800 people received pay through HMRC PAYE in March 2026, unchanged from February but up 1.1% over the year.
- Earnings: Median monthly pay stood at £2,434 in March 2026, a decrease of £60 (2.4%) over the month, though still 1.0% higher than the same period last year.
- Unemployment: The seasonally adjusted rate was estimated at 2.2% for December 2025 to February 2026—up 0.1 percentage points over the quarter and 0.7 percentage points over the year. This remains the lowest unemployment rate of any UK region.
- Employment: The employment rate for people aged 16 to 64 fell by 0.8 percentage points over the quarter to 71.2%, with the total number of employed people estimated at 889,000.
- Economic inactivity: 27.2% of working-age adults were neither working nor seeking work, an increase of 0.8 percentage points over the quarter, though down 0.4 percentage points over the year. This is the highest inactivity rate in the UK.
- Weekly hours: Total hours worked decreased by 5.2% over the quarter to 28.6 million hours.
- Claimant count: 35,400 people (3.5% of the workforce) were claiming unemployment-related benefits in March 2026—up 1.5% on the month and 18.7% higher than pre-pandemic levels in March 2020.
- Redundancies: 160 redundancies were confirmed in March 2026, bringing the annual total to 2,370—around one third higher than the previous year. Proposed redundancies over the twelve months to March 2026 totalled 2,910, down 5% on the year.
Official Commentary: “Losing Momentum”
The Department for the Economy’s assessment of the figures suggests a market that is treading water rather than growing. In its commentary, NISRA stated:
“The latest labour market data indicates that Northern Ireland’s labour market continues to lose momentum. Although there was an increase in payrolled employee numbers from the HMRC payroll data over the year, this increase was relatively small.”
The agency also noted that the Labour Force Survey showed no statistically significant changes over either the quarter or the year, adding:
“There were no statistically significant changes reported from the Labour Force Survey (LFS) over either the quarter or the year, again indicating a relatively steady state in the labour market.”
The UK Context: A Tightening Picture
While Northern Ireland records the UK’s lowest unemployment rate at 2.2%, the wider UK picture offers a warning. The Office for National Statistics (ONS) reported that UK unemployment fell unexpectedly to 4.9% in the three months to February 2026, but this decline was driven by a rise in economic inactivity rather than job creation. Alex Hall-Chen, principal policy advisor for employment at the Institute of Directors, observed:
“Whilst the unemployment rate has decreased on the quarter, this appears to be linked to increasing rates of economic inactivity, rather than job creation.”
Furthermore, the ONS noted that job vacancies have fallen to their lowest level since 2021, and payroll employment has remained “broadly flat.” With the Iran war beginning on 28 February 2026, the full impact of surging energy costs and business uncertainty is expected to feed through into future releases. The Bank of England has hinted at possible interest rate hikes later this year if the conflict fuels persistent inflation, despite weakening pay growth.
The Inactivity Challenge
Northern Ireland’s economic inactivity rate of 27.2% remains its persistent Achilles’ heel. While the UK average stands at approximately 21%, more than one in four working-age adults in Northern Ireland are outside the labour market entirely—neither working nor looking for work. Research indicates significant regional variation, with Derry City and Strabane District Council recording inactivity rates as high as 35.2%, while Armagh City, Banbridge and Craigavon sits at 19.2%.
This high inactivity rate masks the true health of the labour market. With fewer people available to fill roles, employers face a constrained talent pool even when headline unemployment appears low. The latest figures show total weekly hours worked have dropped by 1.3% over the year, suggesting that while people remain on payrolls, they may be working fewer hours or shifts.
Wages and Redundancies
Pay growth in Northern Ireland has slowed. The median monthly pay of £2,434 represents a monthly drop of 2.4%, though it remains 1% higher than a year ago. This contrasts with the UK trend where public sector pay growth (5.2%) continues to outpace the private sector (3.2%), creating a “tale of two sectors” that may exacerbate recruitment difficulties in private industry.
The redundancy figures also warrant attention. While proposed redundancies have fallen slightly compared to the previous year, confirmed redundancies are running significantly higher—up by roughly a third. Major employers including ABP Food Group and FinTrU have announced significant job cuts in early 2026, particularly affecting manufacturing and financial services.
Questions for Policymakers
The latest release leaves several important questions unanswered:
- How will the economic fallout from the Iran war, which began after the survey period closed, affect hiring and redundancy plans in the April and May 2026 data releases?
- With economic inactivity rising again after recent declines, what targeted interventions are needed to bring the 27.2% of inactive working-age adults back into employment, particularly in areas like Derry and Strabane where inactivity exceeds 35%?
- Does the combination of falling weekly hours and rising redundancies signal a shift toward underemployment, even as the unemployment rate remains low?
- How will the divergence between public and private sector wage growth affect recruitment and retention in Northern Ireland’s private sector, particularly in retail and hospitality where vacancy rates are already at pandemic-era lows?
What to Watch For
The next Labour Market Report is scheduled for release on 19 May 2026. That publication will be critical, as it will begin to capture employer responses to the Iran conflict and the associated energy price shocks that have seen heating oil costs surge by approximately 88% between late February and late March 2026.
Readers can access the full statistical tables and historical data at the NISRA website. The Department for the Economy notes that HMRC PAYE estimates are based on early data and subject to revision as more complete information becomes available.