The number of people out of work due to long-term sickness has reached a record high – 2.55 million – while the number of employees on payrolls has fallen for the first time in two years.
The May 2023 labour market figures from the Office for National Statistics show that 438,000 more people were not looking for work from January to March 2023 because they were on long-term sick leave.
Its estimate of payrolled employees for April 2023 was 29.8 million, down by 136,000 compared with the March 2023 figure. This is the first fall in total payrolled employees since February 2021, but the ONS said this should be treated as a provisional estimate until more data are received next month.
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The unemployment rate from January to March increased by 0.1 percentage points on the quarter to 3.9%, largely driven by an increase in people unemployed for over 12 months.
However, a record net flow of people out of economic inactivity into employment was also recorded.
Neil Carberry, chief executive of the Recruitment and Employment Confederation, said: “We should be concerned by the high number of people who are economically inactive because they are sick, and progress on tackling inactivity overall is too slow.
“It is a year since the ONS reported on high worklessness, labour shortages and high inflation, and too little has changed. This is holding the economy back by constraining companies’ ability to grow.”
Carberry urged employers to consider innovative approaches to hiring, considering what they offer in terms of flexible work and employee engagement. The government should also develop a wider industrial and workforce strategy, including a sensible approach to immigration and skills reform, he said.
Ben Harrison, director of the Work Foundation at Lancaster University, said the government should revisit its commitment to introducing an Employment Bill to help thousands more people to work by offering flexibility from day one, helping them to balance work with long-term health conditions.
We should be concerned by the high number of people who are economically inactive because they are sick, and progress on tackling inactivity overall is too slow.” – Neil Carberry, REC
“Long-term sickness has hit a record at 2.55 million and the number of people opting out of work on the grounds of ill health suggests a radically different approach is needed to boost the UK workforce,” he said.
Employers continued to rein in their recruitment activity, and the estimated number of vacancies from February to April 2023 fell by 55,000 compared with the previous quarter. This was the tenth consecutive quarterly fall in job vacancies. Available jobs fell in 14 of the 18 sectors tracked by the ONS, with the largest decreases seen in financial and insurance activities, as well as mining and quarrying.
Growth in average weekly earnings in Britain continued to be outstripped by inflation. Total pay (including bonuses) fell by 3% in real terms in January to March 2023, while regular pay dropped 2% compared with the same period a year earlier.
In January to March 2023, CPIH (the consumer prices index including housing costs) was an average of 9.0%.
Nominal regular pay growth in the public sector was at its highest level since 2003 which has narrowed the gap with private pay growth. Average regular pay growth for the private sector was 7.% in January to March 2023, and 5.6% for the public sector.
CIPD labour market economist Jonathan Boys said public sector employers will continue to face recruitment and retention difficulties while the difference in pay between the two sectors persists.
Earlier this week the HR body said public sector forecast pay awards are expected to rise at their fastest rate in over a decade.
He said: “The pandemic has left a lasting mark on the UK’s labour market, with a shrinking workforce and a mismatch of skills and demand. Employers need to offer more than just higher wages to attract and retain staff. They need to create quality jobs that offer flexibility, autonomy and meaning, as well as opportunities for learning and development.
“With a record number of people inactive due to sickness, there must be a stronger public policy focus on occupational health and keeping people in work, including reform of statutory sick pay.”
Chris Gray, director at recruitment company ManpowerGroup UK, said: “The challenge for most organisations is getting the balance right. Retention strategies are important but they need firm commitment and good levels of investment in areas such as training and employee benefits and incentives.
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“The demand to keep wages broadly in line with inflation – as we’ve seen with ongoing industrial action this year – means that organisations are also under exceptional financial pressures, especially those who already operate within tight margins.”
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