The number of economically inactive people because of long-term sickness has reached a record high of more than 2.5 million, official data has revealed.
The latest figures from the Office for National Statistics (ONS) for January to March 2023 show that, since the Covid pandemic, there are now well over 400,000 more people outside of the labour market as a result of ill health.
Darren Morgan, director of economic statistics at the ONS, told the BBC’s Today programme that the main causes of this were a rise in conditions related to mental health and increased symptoms of long Covid, such as post-viral fatigue.
The data also revealed that the number of employees on UK firms’ payrolls decreased for the first time since February 2021. Its estimate of payrolled employees for April 2023 reveals a monthly fall, down 136,000 on the revised March 2023 figures to 29.8 million.
However, the ONS stressed that this should only be regarded as a provisional estimate and that it would probably be updated once additional data is received next month.
Neil Carberry, chief executive of the Recruitment & Employment Confederation, said: “We should be concerned by the high number of people who are economically inactive because they are sick and progress on tackling inactivity overall is too slow. It is a year since the ONS reported on high worklessness, labour shortages and high inflation and too little has changed.”
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Both the government and businesses must try to fix this, Carberry stressed, and organisations could help themselves by utilising innovative recruiting practices and partnering with specialists. He advised employers to consider their offer of flexible work and employee engagement as part of a more thorough recruitment and retention strategy.
Tony Wilson, director of the Institute for Employment Studies, said the UK still has a great deal to do to assist those who are unemployed in getting ready for and returning to the workforce, particularly those with long-term health conditions. “The announcements at the budget on this were a start, but will largely only replace provision that is already in place and due to end next year,” he said, adding that we needed to see more focus on helping certain groups into existing employment services.
He used the examples of Jobcentre Plus and the Restart Scheme, and added that there should be “more investment in the kinds of specialised employment support, occupational health and workplace practices that will make a difference”.
Meanwhile, Chris Thomas, head of IPPR’s Commission on Health and Prosperity, said long-term sickness was “fatally undermining” our economy and “holding back people’s ability to live long, happy and prosperous lives”.
“It’s time to make better health a core, central and cross-department mission of the government so we can tackle the NHS crisis and take bolder action on public health issues,” he said.
Continued decline in vacancies
The official figures also showed that the unemployment rate for the three months ending in March 2023 rose by 0.1 percentage points to 3.9 per cent. The increase in unemployment was largely driven by people unemployed for more than 12 months.
The expected number of vacancies fell by 55,000 in the quarter from February to April 2023, to just over one million. The ONS stated that this tenth straight quarterly decline in openings reflected uncertainty across industries, as survey respondents continued to cite economic conditions as a factor in hiring freezes.
The figures also revealed that there were 556,000 working days lost because of labour disputes in March 2023, up from 332,000 in February 2023.
Jim Moore, employee relations expert at HR consultants Hamilton Nash, said economic uncertainty was continuing to plague Britain’s employers, and a tenth consecutive fall in vacancies means that there were 214,000 fewer available jobs compared to this time last year. “With the biggest percentage decreases seen in financial services and mining, this is a problem that affects all corners of the jobs market, and companies large and small,” he said.
The employment rate may have edged up to 75.9 per cent, but this was primarily driven by an increase in part-time and self-employed workers and does not reflect an increase in full-time employment, he added. This is the “precarious nature of the jobs market for many workers”, Moore said.
‘Pay packets shrinking’
The ONS data also indicated that growth in average total pay, including bonuses, was 5.8 per cent, and growth in regular pay, excluding bonuses, was 6.7 per cent among employees from January to March 2023.
However, in real terms, adjusted for inflation, growth in total and regular pay fell by 3 per cent in the year from January to March 2023, and 2 per cent for regular pay.
The average regular pay rise for the private sector was 7 per cent, while the public sector’s pay growth was similarly the highest since 2003, at 5.6 per cent.
Jonathan Boys, labour market economist at the CIPD, said: “This labour market tightness continues to drive high nominal pay rises, with regular pay growing by 6.7 per cent.
“However, with stubbornly high inflation, pay packets are shrinking in real terms,” he said, adding that, as long as a gap exists, the absolute pay gap will only widen and make it more difficult for public sector employees to find and keep jobs, which is a “key factor in fuelling current industrial action”.
Boys emphasised that to attract and keep employees, firms must provide more than just pay and they must also establish meaningful work with opportunities for growth and learning.