The number of working-age adults in Britain who are out of work because of long-term illness has hit a record high, official figures show, amid concerns over shortages of workers in the UK economy.
The Office for National Statistics said unemployment in the UK fell to 3.5% in the three months to August, from a previous level of 3.8%, falling to the lowest level since February 1974.
However, the drop in the headline rate came amid a sharp rise in the number of working-age adults classified by statisticians as “economically inactive”, meaning they are neither employed nor in the labor force. look for a job.
While there are around 1.2 million unemployed, the inactivity rate increased by 0.6 percentage points over the three-month period to 21.7%, with almost 9 million people aged 16 to 64 years economically inactive.
The rise was driven by students, as well as long-term illnesses which hit a record high, with the biggest increases in inactivity rates among those aged 50-64 and those aged 16-24. . Nearly 2.5 million people are inactive due to long-term health problems.
Economists have said rising sickness rates will pose a serious challenge to the government’s economic growth agenda.
Ben Harrison, director of the Work Foundation at Lancaster University, said: “The Government is right to focus on growing the economy, but it cannot do this without tackling the issue of labor participation. UK.
“If the Prime Minister is to be true to her word on ‘making tough decisions’, her administration should abandon the rhetoric about benefit claimants having to work harder and instead focus all the power of government on supporting those who have dropped out of the labor market, including those who do not receive Universal Credit.
The figures come as employers said severe worker shortages following the Covid pandemic and Brexit were holding back the UK economy, with the number of vacancies approaching a record high at more than 1.2 million.
In a context of inflation at its highest for 40 years and shortages in key trades, annual wage growth, including bonuses, strengthened to 6% over the three months ending in August. Excluding bonuses, wage growth was 5.4%.
Although up from previous months, annual growth in workers’ wages still failed to keep pace with soaring inflation, which currently stands at 9.9% in the UK. The ONS said wage growth fell in real terms by 2.4% when bonuses were taken into account and by 2.9% for regular wages – slightly lower than the record falls seen in June, but still among the biggest declines since records began in 2001.
Since comparable records began in 1971, the rate of economic inactivity had generally been falling, before rising during the Covid pandemic as students decided to stay in education longer during lockdowns, and levels of disease increased in the elderly.
Inactivity rates began to fall again earlier this year, although they began to rise sharply again in May, a trend that has raised alarm bells among economists.
Experts said rising levels of illness preventing working-age adults from entering the workforce came as pressure mounts on health services from Covid backlogs and after a decade of austerity in the public sector.
Bank of America analysts wrote in a note to clients last week: “There is considerable evidence that deteriorating health care performance has a first-order effect on potential growth: increased work-related illnesses. reduced the labor supply. Any return of austerity could worsen this sickness trend, while also damaging other elements of potential supply, such as skills.
Victoria Prentis, Minister for Employment, said the Government had made changes to Universal Credit and its offer for older workers so that more claimants receive support from a dedicated work coach.
“Today’s figures show the strength of our labor market; our unemployment rate remains at near record highs and there are a high number of people on the payroll,” she said. To support economic growth, it is essential to encourage workers to enter the labor market, making the most of the skills and experience of this country while tackling the obstacles that job seekers are faced.