Tuesday, November 29, 2022

Number of unemployed at its lowest in almost 50 years, but also long-term sickness at record levels

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The job shortage is worsening as droves of workers drop out of the job market for health reasons, new figures show

A labor shortage became apparent after a sharp rise in the number of people exiting the labor market pushed unemployment rates to their lowest levels since 1974, official figures show.

The unemployment rate fell to 3.5 percent in the three months to August, the Office for National Statistics (ONS) said. The number of people unemployed or looking for work rose by 252,000, the largest increase since records began in 1971, the figures show.

Vacancies fell to their lowest level since late 2021 in the three months to September. But the ONS said the ratio of unemployed to vacancies has hit a record low.

ONS’ David Freeman said: “The unemployment rate continues to fall and is now at its lowest level in almost 50 years.

“However, the number of people who are neither working nor looking for work continues to rise, with those who report it because of their long-term illness reaching an all-time high.

“While the number of vacancies remains high after a long period of rapid growth, it has now declined somewhat as a number of employers tell us they have reduced hiring due to various economic constraints. But since unemployment has also fallen, there are still more vacancies than unemployed.”

Despite high employment rates, workers still face tight wages, with figures showing wage increases are not keeping pace with the cost of living. Adjusted for inflation, total weekly pay was 2.4 percent lower than a year earlier.

The inactivity rate, which measures the proportion of 16-64 year olds not looking for work, rose to 21.7 percent from June to August, the ONS said. The number of people unable to work due to long-term illnesses reached an undesirable record high of almost 2.5 million.

The tight labor market in the UK and its impact on rising inflation are putting pressure on the Bank of England to ramp up interest rate hikes at next month’s meeting.

Kitty Ussher of the Institute of Directors said: “The labor market remains extraordinarily tight, for the first time ever there are more vacancies in the economy than people looking for work and no let-up in hiring in September.

“Although the number of job vacancies now appears to have peaked, at 1.2 million, it remains significantly higher than before the pandemic.

“Combined with such a low unemployment rate and rising wage increases, we see no reason why the Bank of England should halt its upward trend in rate hikes at its early November meeting.

Neil Carberry, Chief Executive of the Recruitment & Employment Confederation, said: “A small drop in job vacancies and overall employment are signs that the post-pandemic recovery has come to an end. But job vacancies are still higher than unemployment, which means it’s still a good time to look for work.”

Labor Secretary Victoria Prentis said: “The numbers show the strength of our labor market; Our unemployment rate remains at a record low and there are high numbers of people on payrolls. To support economic growth, it is vital that we encourage workers to enter the labor market, make the most of the skills and experience this country has, while tackling the barriers that job seekers face are confronted with.”

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