Britain’s jobs recovery falls further off course as employment falls, and inactivity rises

The UK’s post-pandemic jobs recovery has fallen further off course, as employment and payrolled jobs both fell, while working-age economic inactivity reached its highest level since 2015, the Resolution Foundation said today (Tuesday) in response to the latest ONS labour market statistics.

The UK is currently the only G7 economy yet to return to its pre-pandemic employment rate (of 76.2 per cent), and the latest data showed further signs of a struggling jobs market.

The number of job vacancies fell for the 21st consecutive month, while unemployment nudged up to 4.2 per cent, and employment fell to 74.5 per cent in three months to February. More up-to-date data from the PAYE system shows that payrolled employment also fell in March – the first time outside the pandemic that this measure has fallen for two consecutive months (although the latest month is often revised).

As well as a deterioration in the number of people in work, the number of people completely out of the labour market continued to rise, with the economic inactivity rising to its highest level since 2015 among working age people.

This rise is broad based – the inactivity rate is up (and the employment rate down) for all age groups except those aged 35-49, and in all English regions outside London and the South East.

The number of people inactive because of ill health has hit a new record high of 2.8 million, while there has been a worrying increase in the number of people who don’t want a job – the number of inactive who want a job is at its lowest since Mar-May 2022.

The only silver lining is that among those still in work, regular real wages grew in the three months to February by a healthy 2.1 per cent.

Charlie McCurdy, Economist at the Resolution Foundation, said:

“Britain post-pandemic jobs recovery has fallen further off course, with falling employment adding to the longer-term rise in economic inactivity.

“Rising redundancies and falling job levels are signs of a stagnant economy, while rising inactivity and long-term sickness suggest there are wider issues with the health of our workforce.

“Tackling rising inactivity – and its impact on the public finances, the benefits system, and people’s wider health and wellbeing – is one of the biggest economic challenges facing both this government, and whoever wins the next election.”