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Latest NewsJob creation and lossesLabour marketPay & benefitsRecruitment & retention

ONS: Unemployment and economic inactivity increase

by Ashleigh Webber 16 Apr 2024
by Ashleigh Webber 16 Apr 2024 Unemployment and economic inactivity have increased
Image: Shutterstock
Unemployment and economic inactivity have increased
Image: Shutterstock

Unemployment and economic inactivity both increased at the beginning of this year as employers continued to rein in recruitment.

The latest official labour market estimates from the Office for National Statistics (ONS) showed that the UK unemployment rate increased to 4.2% in the December 2023 to February 2024 quarter – a six-month high and a slight increase from the previous three-month period (4.0%).

Those unemployed for over six and up to 12 months increased in the latest quarter, following recent declines, and those unemployed for over 12 months continued to increase.

Meanwhile, employers were hesitant to recruit, with the estimated number of vacancies posted in January to March 2024 falling to 916,000, around 13,000 fewer than the previous quarter. This was the 21st consecutive quarterly fall in vacancies.

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The economic inactivity rate also continued to increase, the April 2024 labour market figures showed, rising to 22.2% in this latest quarter, up from 22.0% in November to January 2024. This was mainly driven by students and long-term sickness, predominantly among younger people, the ONS said.

Pay growth remained largely similar to the level seen in previous months. In December 2023 to February 2024 the annual increase in employees’ regular earnings excluding bonuses was 6%, and 5.6% including bonuses. Adjusted for CPIH inflation, these figures were 1.9% and 1.6% respectively.

Tony Wilson, director of the Institute for Employment Studies, said the figures suggested it was the labour market holding back growth, not employers.

He posted on X: ­“Truly awful jobs data today. Employment, economic inactivity as bad as depths of pandemic. The data is VERY volatile so don’t read too much into short-term changes, but trend is clearly poor. And I think it shows it’s the labour market holding back growth – not other way round.”

Truly awful jobs data today.
Employment, economic inactivity as bad as depths of pandemic.
The data is VERY volatile so don’t read too much into short-term changes, but trend is clearly poor.
And I think it shows it’s the labour market holding back growth – not other way round… pic.twitter.com/wjMaGJNlST

— Tony Wilson (@tonywilsonIES) April 16, 2024

Ben Harrison, director of the Work Foundation at Lancaster University, said: “A record 2.82 million people are economically inactive due to long-term sickness, and the UK is facing unresolved structural issues with labour market participation, as employers aim to fill 916,000 vacancies.

“The UK continues to be an international outlier with participation rates below pre-Covid levels. Since December 2019 to February 2020, 717,000 people have become economically inactive due to ill health and the tide is not turning.”

He said the government needed to support people to move into sustained and secure employment. “Policy-makers must look beyond short-sighted approaches that focus on getting jobseekers into ‘any job’. Instead, they must look to improve the quality of the jobs on offer, look at preventative measures that stop sick workers falling out of the labour market and scale up the availability of health and occupational support services to support those who have fallen out of work back into secure, long-term employment,” said Harrison.

Jon Boys, senior labour market economist at the CIPD, said: “Employers can make reasonable adjustments and invest in occupational health. Not only to facilitate people who are inactive back into work but to future-proof their workforces by helping people to stay in work. Approximately half of people of working age with a long-term health condition are still in work, showing that appropriate measures can help both individuals and organisations be resilient.”

Work and pensions secretary Mel Stride commented: “We’ve seen long-term sickness-related inactivity rise since the pandemic, that’s why we introduced our £2.5bn Back to Work Plan to transform lives and grow the economy.

“Our welfare reforms will cut the number of people due to be placed in the highest tier of incapacity benefits by over 370,000 – people we will now be helping back to work.

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“With real wages up again and millions benefiting from this month’s huge boost to the national minimum wage, it is work, not welfare, that delivers the best financial security for British households.”

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Ashleigh Webber

Ashleigh is a former editor of OHW+ and former HR and wellbeing editor at Personnel Today. Ashleigh's areas of interest include employee health and wellbeing, equality and inclusion and skills development. She has hosted many webinars for Personnel Today, on topics including employee retention, financial wellbeing and menopause support.

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