Record Number of Britons Seeking Jobs as ‘Economic Inactivity’ Drops Amid Rising Cost of Living

A man walks past a job centre in Manchester, England, on July 8, 2020. Phil Noble/Reuters

A record number of people are entering or returning to the UK job market as the cost of living continues to rise, the latest official data shows.

Britain’s economically inactive population increased during the COVID-19 pandemic as many older workers chose to retire early.

But over recent months, there has been a wave of people entering or returning to the workplace as rising cost of living puts pressure on household finance.

“Flows estimates between July to September 2022 and October to December 2022 show that there was a record-high net flow out of economic inactivity, driven by people moving from economic inactivity to employment,” said the Office of National Statistics (ONS).

This was driven largely by younger people and students, and older people aged 50 to 64, for whom inactivity dropped the most, the ONS said.

ONS director of economic statistics Darren Morgan said: “The last quarter of 2022 saw fewer people remaining outside the labour market altogether, with some moving straight back into a job and others starting to seek work again. This meant that although employment rose again, unemployment edged up also.”

According to the latest data, the rate of UK unemployment was 3.7 percent in the three months to December, the same rate that was recorded in the three months to November. However, it had edged higher than the previous calendar quarter, with the unemployment rate standing at 3.6 percent in the three months to September.

The data showed that regular pay growth was 6.7 percent in the three months, the strongest growth rate seen outside the pandemic. But wages continued to be outstripped by rising prices.

Once consumer prices index (CPI) inflation is taken into account, regular pay fell by 3.6 percent in the three-month period, compared with the previous year.

Strike Disruptions

The ONS said the UK recorded the highest number of working days lost to strike action for more than a decade in December.

About 843,000 working days were lost to labour disputes in the month, representing the heaviest impact from strike action during a month since November 2011, when 997,000 working days were hit.

The surge in lost days came after rolling industrial action involving workers of the Post Office, the rail sector, and the National Health Service (NHS).

Darren Morgan of the ONS said: “The number of working days lost to strikes rose again sharply in December. Transport and communications remained the most heavily affected area, but this month there was also a large contribution from the health sector.”

‘Sign of Resilience’

Commenting on the employment data, Chancellor of the Exchequer Jeremy Hunt said: “In tough times unemployment remaining close to record lows is an encouraging sign of resilience in our labour market. The best thing we can do to make people’s wages go further is stick to our plan to halve inflation this year.”

But the opposition parties accused the ruling Conservatives of mismanaging the economy.

Labour’s shadow chancellor Rachel Reeves said: “Britain has huge potential, but 13 years of the Tories has left real wages down, families worse off, and our economy lagging behind on the global stage. The government needs to stop sitting back and following this path of managed decline.”

Liberal Democrat Treasury spokeswoman Sarah Olney said: “This Conservative government has hammered families with soaring mortgages, rising energy bills, and huge unfair tax hikes. Hard-working people are having their pay squeezed thanks to the incompetence of Rishi Sunak and Jeremy Hunt.

“A long list of Conservative chancellors have driven the economy to the edge of recession, leaving millions worried about losing their jobs. The government should do the right thing, put in place a proper windfall tax and cancel April’s energy bill rise.”

Labour Shortages

Despite the drop in economic inactivity, business groups said that the UK economy continues to suffer from labour shortages.

Matthew Percival, CBI director for people and skills for the Confederation of British Industry (CBI), said: “While there are tentative signs that more people are looking to get back into work, there are still very high vacancies and businesses are having difficulty to fill them. The upcoming budget is the opportune moment for the government to now make some real progress on the workforce shortages the economy is struggling with.”

Jane Gratton, head of people policy at the British Chambers of Commerce (BCC), said: “Businesses are crying out for people to fill job vacancies at all skill levels, and this must be the number one focus for government if it’s serious about economic growth.

“There are still a huge number of vacancies, currently sitting at 1.134 million, and this is stopping firms in their tracks. It means they are struggling to meet the orders on their books, and it puts any plans for growth far out of reach.”

She urged the government to reform the Shortage Occupation List to help firms fill urgent job vacancies from outside the UK when they cannot recruit locally.

PA Media contributed to this report.