Revisions by the ONS (again):
Depth of worklessness crisis revealed as number of job dropouts revised up
New estimates show 9.25 million Britons are neither in work nor looking for work
Britain’s jobless crisis is worse than previously thought as new estimates show that more than 400,000 extra people have dropped out of the labour market.
There are now 9.25 million people aged between 16 and 64 who are neither in work nor looking for work, according to the Office for National Statistics (ONS), meaning they are officially classed as “economically inactive”.
Officials have revised the figures upwards because the adult population is almost 750,000 bigger than previously expected, fuelled by greater levels of immigration.
The bulk of this 750,000 is made up of people who are not working nor looking for work, as the figures show that 172,000 are employed, 30,000 are unemployed and 414,000 are inactive.
Ill health has been cited as a key driver, with a total of 2.8m people of working age having quit the jobs market because of long-term sickness. This is up from 2.6m previously.
Analysis found that an extra 108,000 were out of work because they were looking after family or a household, while there are also 142,000 more students.
Hannah Slaughter, economist at the Resolution Foundation, said the new figures show the scale of the challenge facing Britain’s economy.
She said: “Britain has a bigger, but sicker, workforce than we previously thought. Of particular concern is the fact that a record 2.8m people in the country are currently inactive due to ill health.
“Tackling rising ill-health is a huge social and economic challenge that we’ll be facing throughout the 2020s, as will getting the UK employment back up to and beyond pre-pandemic levels.”
The share of working-age adults employed is now estimated at 75pc, below the 75.8pc previously published, while the proportion who are inactive has risen from 20.8pc to 21.9pc.
However, the share who are unemployed – out of work but looking for a job – is 3.9pc. This is lower than the 4.2pc previously estimated.
Rather than holding steady over much of last year, the new figures indicate the unemployment rate fell from 4.3pc in the three months to July to 3.9pc in the three months to November.
This may complicate the Bank of England’s plans to lower interest rates as the jobs market is hotter than previously thought.
Philip Shaw, economist at Investec, said: “This release is likely to result in the Monetary Policy Committee taking a more cautious approach in assessing the appropriate time to bring interest rates down.”
However, there are still ongoing concerns around the ONS data, as official statisticians warn that “some uncertainty remains in these estimates”.
This stems from the ONS’ decision to update the way it measures the jobs market after the pandemic prompted a sharp drop in the number of households responding to surveys.
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