UK set to be only nation with lower employment than before Covid

Six hundred thousand more Britons ‘economically inactive’ than in 2019, study finds

The UK has one of the worst recoveries from Covid in the world when it comes to jobs, startling new research has found.

Britain is on track to be the only country in the developed world with lower employment levels in 2023 than before the pandemic, according to top economists.

The Institute for Employment Studies (IES) said the UK is almost unique in seeing employment levels lower than the pre-Covid period – with 600,000 more people “economically inactive” than in 2019.

Only Latvia and Switzerland fare worse in their jobs recovery, the experts said. By early next year, Britain is likely to be the only country in the developed world with fewer people in jobs than in 2019.

Experts said the relatively low numbers claiming unemployment benefits were “masking” serious problems getting people into work.

The IES report Working for the Future pointed to a steady rise in those out of work because of ill health, as well as a surge in people retiring early.

There has been an increase of more than 200,000 since 2019 in those out of work for five years or more due to ill health, and around 50,000 more people have retired early in the last two years.

Report authors criticised the quality employment support, with just one-fifth of jobseekers – and fewer than a fifth of employers – using Jobcentre Plus. Britain was also found to be lagging behind other nations on employment for disabled people.

Tony Wilson, IES director and lead report author, said there were “not enough people able to access employment support, little help for employers and a complicated, fragmented and often underfunded system of programmes, schemes and services”.

Urging Rishi Sunak’s new government to address the problem, he said there was a “real opportunity now to look again at our approach and build something for the future”.

Kate Bell, head of economics at the Trades Union Congress, said the report “shows just how far we have to go before everyone can get the decent work they want and deserve”.

She added: “Compared to workers in other European countries, disabled people and older people are much less likely to be in work in the UK. That’s a huge waste of potential.”

It comes as The Bank of England has forecast that unemployment could rise by 500,000 next year, almost doubling to 6.5 per cent.

Mr Sunak said getting people into work was the best way to address the cost of living crisis, as he was challenged at PMQs on Wednesday about rising levels of child poverty.

Labour MP Barry Sheerman said children in his constituency were going to bed hungry – asking the prime minister what he was doing to tackle the problem.

The PM replied: “The absolute best way to ensure that children do not grow up in poverty, which is something none of us want to see, is to ensure they do not grow up in a workless household.”

Mr Sunak said that Tory governments “create jobs for people – that’s the best anti-poverty strategy that we have”.

However, research by the Joseph Rowntree Foundation shows 70 per cent of children in poverty live in a household where at least one parent works.

The IES report launches a new commission on the future of employment support that will work over the next 18 months to gather evidence, in partnership with the abrdn Financial Fairness Trust.