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The recruitment, development and retention of teachers and school leaders is a crucial underpinning for a successful education system. Ensuring there are sufficient numbers of high-quality teachers employed in schools is necessary for the school system to deliver a high-quality education for all children and young people, particularly as the Curriculum for Wales is being introduced. This National Foundation for Educational Research’s (NFER’s) first annual Teacher Labour Market in Wales report aims to analyse the state of the Welsh teacher labour market by measuring the key indicators and trends of teacher recruitment and retention. This is the first of three annual reports funded by the Nuffield Foundation, which will track changes over time. This report analyses Welsh Government school census data on teacher recruitment and retention to assess the current state of the teacher labour market. This analysis shows that the Welsh school system faces a substantial and growing challenge of ensuring there are sufficient numbers of teachers. The recruitment and retention challenge is most acute in secondary schools, in shortage subjects (such as Welsh, maths, science and modern foreign languages), in Welsh medium schools and in schools in areas with high levels of disadvantage.