‘Hidden’ unemployment raises UK jobless rate threefold, report says

‘This challenges the claim that Britain has experienced a job creation miracle in recent years,’ says think tank

Olesya Dmitracova
Economics and Business Editor
Thursday 17 October 2019 19:27 BST
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More than 40 charities have written to the work and pensions secretary warning that the current universal credit rates for under-25s are jeopardising their health and chances of future employment and putting some at risk of homelessness
More than 40 charities have written to the work and pensions secretary warning that the current universal credit rates for under-25s are jeopardising their health and chances of future employment and putting some at risk of homelessness (PA)

Britain’s jobless rate is almost three times higher than official data suggests once “hidden unemployment” is included, according to new research.

The report by the Organisation for Economic Cooperation and Development (OECD) and the Centre for Cities, a UK think tank, casts doubt on the apparent resilience of the UK labour market since the EU referendum in 2016.

The authors define the “hidden” jobless as people who are not looking for a job because they believe no jobs are available where they live or because they have health issues or a disability. The researchers point to previous work by the OECD showing that some people with health issues or a disability would be able to work if arrangements such as flexible hours or remote work were an option.

In contrast, UK government statisticians treat those two types of the “hidden” jobless as economically inactive rather than unemployed, without distinguishing why some people are not looking for work.

“When the hidden unemployed are added to official unemployment statistics, the number of working-age jobless people not in education is estimated to jump from 4.6 per cent to 13.2 per cent,” the Centre for Cities said on Thursday.

“This challenges the claim that Britain has experienced a job creation miracle in recent years.”

Britain’s official unemployment rate stood at 4.6 per cent in early 2017. The authors used that figure because other data in the report is also from 2017.

In cities with weaker economies, such as Liverpool, Dundee and Sunderland, the jobless rate that includes the “hidden” unemployed reaches nearly 20 per cent, according to the report.

“This research suggests that people in cities which have struggled to recover from the deindustrialisation of the 20th century could be dealt a second blow as they are ill-equipped to respond to automation,” said Andrew Carter, the chief executive of the Centre for Cities.

In another change from official statistics, the researchers excluded from their calculation of the overall unemployment rates people who are inactive by choice or for other non-economic reasons – specifically, students, early retirees and people looking after children, relatives or a home.

“Being a student, retiring earlier and looking after family or home are not necessarily directly linked to the economic performance of the local area where people live and work,” they wrote.

For example, most early retirees have probably left work because they can afford it, the authors note.

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