James Forsyth

Britain needs its missing workers back

Britain needs its missing workers back
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Amid all the economic gloom at the moment, the unemployment figure is one bright spot. It is just 3.6 per cent, down from 3.8 per cent this year, and close to a historic low. But, as I say in the Times this morning, even this glimmer of hope is tarnished.

The low unemployment number disguises how many people have left the labour force: more than 20 per cent of working-age Brits are economically inactive, meaning they are neither in work nor looking for it. More than five million are claiming out-of-work benefits. 

Even in the coming recession, unemployment won’t exceed 5 per cent, according to the Office for Budget Responsibility. (Remember how in the 1980s, unemployment went into double digits). There are, according to the Office for National Statistics, more than a million vacancies in the economy.  

Yet almost every month, the number of those not looking for work grows: it jumped by 169,000 in the three months to August. That is more than the population of Oxford. 

This has consequences. The OBR thinks the cost of health and disability benefits will rise by £7.5 billion: quite a sum. A shrinking labour market is also one of the reasons why the Bank of England thinks potential growth is now a mere 0.75 per cent even in 2024-25.  

To be fair, Jeremy Hunt is not ignoring this problem. On Thursday, he announced a review to investigate the mass exodus from the economy, which will report in the new year. It must examine the extent to which lengthening NHS waiting lists are contributing to this rise in economic inactivity. Is it being driven by people not being able to get the treatment they need? Should those whose physical or mental health condition is preventing them from working get treatment quicker? 

Alongside those not in work nor looking for it, there are 970,000 people on Universal Credit who are working very limited hours in an economy where employers are offering shifts. Hunt announced that about 600,000 of them will now be required to meet a work coach to try to increase their hours. 

The Tories desperately need to get back to moving people from welfare into work – not just to reduce the welfare bill but also to boost the economy.

Written byJames Forsyth

James Forsyth is political editor of The Spectator.

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