World

UK: unemployment hits the lowest level in 50 years

Oct 14, 2022 United Kingdom

Unemployment stood at 3.5% in the three months to August, down by 0.3 percentage points from the previous quarter, falling to the lowest level since 1974, but due to a rise in economic inactivity

According to the UK's Office for National Statistics, this drop in unemployment was caused by the larger number of people who are counted as inactive, rather than unemployed, that is, people who are not job-seeking or available to start working. The inactivity rate was up by 0.6 percentage points in the quarter at 21.7%, as compared to the previous one, driven by long-term sickness among older people and students choosing not to work.

"This presents a headache to the government and the Bank of England. The government has no chance of meeting its 2.5% growth target without getting more people back into work", said Thomas Pugh, an economist at the audit firm RSM, in declarations to the Financial Times.

Meanwhile, the employment rate fell by 0.3 percentage points to 75.5% from June to August, leaving it a full percentage point lower than before the pandemic. The number of vacancies also dropped for a third consecutive quarter, although remaining near historic highs, with more job openings than there are unemployed jobseekers.

At the same time, official data shows that rising inflation has outpaced wage growth, leading to a decline in real total pay of 2.4%, year-over-year, from June to August.

Image Credits: Antoine Petitteville on Unsplash

United Kingdom Economy Employment Salaries and wages