More British workers have quit the jobs market, causing the UK’s unemployment rate to hit its lowest level in 48 years but also worsening the already severe labour shortages.
According to the latest data released by the Office for National Statistics (ONS) on Sept. 13, those classed as economically inactive rose by 194,000 to 9 million during the three-month period from May to July 2022, mostly because of rising numbers of long-term sick as well as students, which have led to a shrinking labour market.
The increase in Britain’s economically inactive population in the past few years has also been attributed to many older workers choosing to retire early throughout the COVID-19 pandemic.
The so-called economic inactivity rate rose to 21.7 percent in the quarter—its highest level for more than five years.
The figure is 0.4 percentage points higher than the previous three-month period, and 1.5 percentage points higher than before the pandemic.
Partly owing to the rising economic inactivity, Britain’s unemployment rate has hit its lowest level in 48 years.
The ONS said the unemployment rate fell to 3.6 percent in the three months to July, the lowest rate since May to July in 1974.
Meanwhile, the employment rate rose to 75.4 percent, with the number of employed rising by a far smaller-than-forecast 40,000 to 32.7 million.
‘Grim’
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the jobs figures were “grim,” showing “the recovery in employment has petered out.”James Smith, at the ING banking group, added, “The number of workers classified as long-term sick has jumped dramatically in the past couple of months, and that’s one reason why firms are still struggling to source the staff they need.”
The British Chambers of Commerce (BCC) also expressed concerns over the “extremely tight labour market,” which it said is impacting firms’ ability to invest and grow.
Jane Gratton, the BCC’s head of people policy, said: “Despite a second month of a decrease in job vacancies, the overall number of vacancies in the labour market remains high. With over 1.2 million unfilled jobs across the country, labour shortages have reached crisis levels for businesses across many sectors and regions.
“During a period of increasing inflation, and a stagnant economy, we cannot afford to let recruitment problems further dampen growth.”
She urged the government to help by “reducing the upfront costs on business and providing training related tax breaks, increasing flexibility in the apprenticeship levy, and ensuring job seekers have access to rapid retraining opportunities.”
