The number of 16 to 24-year-olds who are economically inactive has continued to surge, unlike people in other age groups.
The March 2024 labour market figures from the Office for National Statistics (ONS) show that 21.8% of people, one-fifth of adults in the UK, were out of work and not looking for a job in the November 2023 to January 2024 quarter – a level that has remained roughly the same since the pandemic but is slightly above the estimate for 12 months ago.
This is mainly being driven by younger people, with the ONS figures showing significantly slower growth, or reductions, in the economic inactivity rates of other age cohorts.
In November to January, there was a 4.5% increase in the youth economic inactivity rate among people aged 16-24, compared with the same period a year earlier.
This figure grew by 0.9% among those aged 25-34, declined by 0.2% for those aged 35-49, and increased by 1.1% for 50 to 64-year-olds.
The number of those inactive because they were long-term sick fell compared with the previous quarter, but remains higher than estimates a year ago.
Janine Childow, managing director at talent acquisition firm WilsonHCG, said youth inactivity was concerning. “With skills shortages rife – particularly in STEM remits – the UK simply cannot afford to have such a significant level of inactivity from the emerging demographic. More needs to be done to encourage these potential workers into meaningful employment that will add to core skills in the UK, or we could soon face a skills deficit on a more significant scale that will only have a detrimental effect on businesses and the economy,” she said.
Youth economic inactivity
Dr Joe Marshall, chief executive of the National Centre for Universities and Business, called for a comprehensive long-term workforce strategy from the government.
“When coupled with the fact that skills gaps are persistently high, and we have approximately 1 million vacancies, it’s starkly evident that our workforce needs significant preparation for the future.
“Without assistance, our nation’s young people will continue to face unemployment, and employers will lose out on the innovative, talented workforce they crucially need to recover,” he said.
“We are calling on the government to introduce a cohesive plan that involves all stakeholders: the education and training sector, as well as businesses. Without such a strategy, we risk exacerbating the challenges of skill gaps and unemployment, hindering our nation’s economic growth and resilience.”
The UK’s inactive working-age population “puts the UK on the lowest rung of the ladder of the G7 productive economies”, suggested Julia Turney, head of platform and benefits at professional services consultancy Barnett Waddingham.
“Fixing the problem won’t just be about putting real pay into workers’ pockets through national insurance cuts, but requires a fundamental review of the barriers preventing people from seeking, and entering work,” she said. “Government intervention to encourage the 2.8 million long-term sick back into work will be key here, but business leaders have an even more important role in improving workforce health reporting, and solving the employee engagement problem.”
Without assistance, our nation’s young people will continue to face unemployment, and employers will lose out on the innovative, talented workforce they crucially need to recover,” – Dr Joe Marshall, National Centre for Universities and Business
Jon Boys, the CIPD’s senior labour market economist, said: “ Employers need to conduct proper workforce planning so that they have the long-term capacity to meet demand. They mustn’t take their eye off the ball with regards to training and development, investment in which has fallen away in recent years.”
The March 2024 labour market figures also showed that:
- Vacancies in December 2023 to February 2024 fell by 43,000 to an estimated 908,000. This was the 20th consecutive quarterly decrease in vacancies, however, they are still above pre-pandemic levels
- Employees’ annual growth in regular earnings excluding bonuses was 6.1% in November 2023 to January 2024, and 5.6% including bonuses. Adjusted for inflation these grew by 1.8% and 1.4% respectively
- The UK economy lost 203,000 working days to labour disputes in January 204, driven mainly by strikes in the health and social care sector
- Unemployment was 3.9% in November to January, above estimates from a year ago but lower than last quarter.
The Recruitment and Employment Confederation’s chief executive, Neil Carberry, said: “Recruiters report that firms are still ready to move but are taking longer to make decisions about investment and hiring in the face of economic uncertainty. This explains the relatively slow rate of decline [in vacancies], a picture which contrasts with business surveys that show high levels of optimism for later in the year. The Bank of England beginning to cut the base rate would deliver a shot of confidence to businesses and support a likely bounce back in growth this summer.”
ManpowerGroup’s latest employment outlook survey indicates that employers are cautiously optimistic about their hiring needs over the next few months. It recorded a score of +23% for April to June 2024.
“Tactically, the UK job market for Q2 is looking increasingly like a chess game. UK small businesses are playing offence, showing the biggest appetite for business expansion, and creating new roles,” said Michael Stull, ManpowerGroup UK’s managing director.
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“While they look to hire talent displaced by the redundancies that hit multiple sectors last year, bigger organisations are taking a more defensive stance by backfilling vacancies and being more cautious about headcount.”
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