Unemployment figures hide 'economically inactive'

UK unemployment triples from 3.7 per cent to 12.1 per cent when including three million economically inactive people, according to Cities Outlook 2023 - the latest report from the Centre for Cities.

The involuntary inactivity rate is calculated by discounting students, retirees and people looking after family from total inactivity figures. People in the involuntary inactivity category may leave the labour market and stop looking for a job if they are discouraged, believe there are no jobs (or no good jobs) available, or cannot work because of health issues.

The hidden unemployment rate also shows how the ongoing inactivity crisis is deepening regional divides across the country, further highlighting the need for the Government to deliver the levelling up agenda, boost skills, and support job creation.

Of the ten places with the highest hidden unemployment rates, nine are in the North of England, with one in Wales. Meanwhile, eight of the ten urban areas with the lowest rates are in the South.

In Blackburn and Middlesbrough, involuntary inactivity figures push the total unemployment rate up from just under 6 per cent to more than 20 per cent. This strongly contrasts to cities like Gloucester and Reading where the hidden unemployment rate is around eight per cent.

Andrew Carter, Chief Executive, Centre for Cities, said:

“Since the pandemic we have seen lots of headlines alluding to record-low numbers of job seekers but Cities Outlook shows that in many cities, particularly in the North, there is actually a jobs shortage.

"With the UK predicted to enter a recession, the Government must address its lack of action on levelling up so far and act swiftly to create more opportunities to get people back into the labour force.

"This will require implementing an agenda that delivers much-needed investments in skills and public services, while supporting job creation in struggling places.”