Employers advertised 694,940 jobs, a 3.05% fall in the month that continued the downward trend from last year, the online job search site Adzuna said. It was the worst reading since January 2021. Graduate jobs plunged 19.1% to below 10,000 for the first time since Adzuna started tracking the metric in April 2016.

“The market remains challenging, with fewer vacancies and intense competition, but continued wage growth suggests employers are still willing to pay for the right skills,” said Andrew Hunter, the firm’s co-founder.

The average salary reached £43,289 (US$58,300) in January, up 5.98% year-on-year, Adzuna said – above the Bank of England’s 3.25% estimate of non-inflationary stable wage growth.

The findings will add to fears that the UK labour market is fast unwinding, with young people hit hardest. Bank of England rate-setters have recently raised concerns about rising unemployment, which has climbed to 5.2% from 4.7% in the past six months.

Labour’s hikes to the minimum wage and payroll taxes have been blamed, as well as its plans for stricter employment rights. AI also appears to be replacing entry level jobs, which fell 4.46% on the month, according to Adzuna.

Economists are hoping AI and improved business investment spark a recovery in Britain’s feeble productivity, a measure of output per worker that is vital to raising living standards.

Research published Monday by the Boston Consulting Group found that Britain’s biggest industries have been responsible for the decades-long decline in productivity that has roughly halved the GDP growth rate since the end of the 1990s.

Finance, manufacturing, communications and retail have fallen behind the “productivity frontier” over the past two decades, reversing the catch-up achieved between 1997 and 2007, BCG said. The situation has been made worse by an increase in the number of underperforming small firms despite technological advances.

There are more low productivity small companies in the UK today than in 1997 and they are on average less productive than three decades ago. The BCG study highlights the scale of the challenge the UK faces to reverse its productivity trend and close the gap with the US and other economies.