UK Unemployment at 3.9 Percent as Job Vacancies Fall

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

The UK labour market has seen an unexpected rise in unemployment as well as a fall in inactivity, as more men in particular started looking for work.

The Office of National Statistics (ONS) issued its latest employment and unemployment figures on May 16, reporting the main trends of the UK labour market.

The unemployment rate for January to March 2023 increased by 0.1 percentage points on the quarter to 3.9 percent. The unemployment numbers are the highest since the three months to January 2022.

The increase was largely caused by the highest number of unemployed people for over 12 months.

The number of vacancies fell by 55,000 quarter-on-quarter to 1.08 million in February to April 2023, marking the 10th fall in a row. The drop reflected “uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment,” the ONS said.

In the first fall in total payrolled employees since February 2021, the numbers for April 2023 dropped by 136,000 on the revised March 2023 figures, to 29.8 million.

The UK employment rate was estimated at 75.9 percent in January to March 2023, 0.2 percentage points higher than October to December 2022. The increase was driven by part-time and self-employed workers.

Commenting on April labour market figures earlier this year, which showed a rise in both employment and unemployment, Chancellor Jeremy Hunt said that “rising prices continue to eat into pay cheques.” He added that halving inflation in 2023 is one of the government’s top priorities.

“To help families in the meantime, we are making work pay with a record increase in the National Living Wage, while providing cost of living support worth an average of £3,300 per household this year and last, funded through windfall taxes on energy profits,” Hunt said in April.

Economic Inactivity

The economic inactivity rate, which is the proportion of people aged between 16 and 64 who are not in the labour force, decreased by 0.4 percentage points on the quarter, to 21.0 percent in January to March 2023, reported the ONS.

“Employment and unemployment both rose again in the first three months of 2023, driven in particular by men. This means the number of those neither working nor looking for work continues to fall, although the number of people not working due to long-term sickness rose again, to a new record,” said Darren Morgan, director of economic statistics at the ONS.

Looking at economic inactivity by reason, the quarterly decrease was largely driven by those inactive because they are students or inactive for other reasons.

Morgan added that despite the continued growth in pay, “people’s average earnings are still being outstripped by rising prices.”

The ONS cited estimates showing that between October to December 2022 and January to March 2023, there has been a record high net flow out of economic inactivity. This was driven by people moving from economic inactivity to employment.

Strikes

There were 556,000 working days lost because of labour disputes in March 2023, up from 332,000 in February 2023.

“The number of days lost to strikes rose again in March with education and health making up four-fifths of the total this month,” said Morgan.

This year hundreds of thousands of workers across various industries have been striking over pay and conditions. Health care workers, teachers, university staff, train drivers, civil servants, bus drivers, and security guards are among the professionals taking industrial action in the UK since the start of the year.

Disruptions at Heathrow Airport are expected at the end of the month, with two groups of security officers going on strike between May 25 and 27.

Official data showed the UK economy edging up by 0.1 percent in the first quarter of 2023 despite an unexpected 0.3 percent GDP decline in March, caused partly by strikes, weak car sales, and repairs.