Low unemployment misleading because of high sickness claims

The UK’s low unemployment rate is
actually much higher because huge numbers of unemployed people are claiming
sickness benefit instead of unemployment benefit, a new study claims.

Up to seven per cent of Britain’s
working population is now economically inactive because of long-term sickness,
compared to 2.1 per cent in Germany and 0.3 per cent in France.

David Webster, a former labour
economist at the London School of Economics, told the British Association for
the Advancement of Science’s annual conference that since the mid-1980s more
than one-and-half million additional UK people of working age have moved on to
long-term sickness benefit.

He said, “In February 2001 claimant
unemployment in Britain fell below one million for the first time in 25 years.
But this figure is misleading: It is well known that the count has been reduced
by administrative changes and that on the international “ILO” definition,
unemployment is still at one and a half million. But the European Labour Force
Survey (LFS) shows that whereas in France, 91% of people who say they want to
work are counted as ILO unemployed, in Britain the figure is only 44%.

“The UK now has the highest level of
working age economic inactivity due to sickness in the European Union, at 7.0%,
compared to 2.1% in Germany and 0.3% in France.

“The evidence suggests that most of
these people are really unemployed. They have moved on to sickness benefits –
to which they are entitled – in response to reductions in unemployment benefits
which have been made in an attempt to increase financial incentive to work.”

Webster claims that the geographical
pattern of working age sickness closely matches that of unemployment.

DSS statistics for November 2000
show that in the areas of highest unemployment, such as Glasgow, Liverpool and
Manchester, 15-20% of the working age population is claiming sickness benefits.

Webster says that when both
recognised and disguised unemployment are taken into account, the real
unemployment rate in many areas is around 25%.

By Ben Willmott

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