The UK’s unemployment rate could be three times higher than government figures show due to widespread “hidden unemployment,” a report has warned.
Official figures published by the UK’s Office for National Statistics (ONS) show there are just 1.2m unemployed people in Britain, leading to an unemployment rate of 3.7 per cent.
However, the Centre for Cities warned that there were millions of “missing workers” living throughout the UK who are excluded from official figures.
It explains that the UK’s official figures fail to record people who have withdrawn from the labour market and are no longer looking for a job.
Including those missing workers in the official figures more triples the number of people out of work, from 1.2m to 4.7m, leading to a “hidden unemployment” rate of 12.7 per cent.
Those hidden workers are most concentrated in northern English towns cities such as Blackburn, Hull, and Middlesborough which all have hidden unemployment nearing 20 per cent.
Nine of the towns and cities with the highest levels of hidden unemployment are in the north of England, the report shows, as warns of an “army of missing workers in northern cities”.
Newport in Wales is the only city that is not in the north of England that has a spot in the top ten, while the London satellite of Luton is in 11th place.
Reading, Basildon, Gloucester, Norwich, and York have the lowest levels of hidden workers in the country, the report shows.
The report warns that in many of the northern cities with highest rates of hidden unemployment, pre-existing inactivity was compounded by Covid-19.
Health problems continue to be the main reason that people have exited the workforce, as it notes those health issues were made worse by the pandemic.
The paper notes that more than 40 per cent of missing workers in towns and cities such as Newport and Sunderland are not seeking work because of long-term sickness.
Hidden unemployment rates are also higher in places with weaker economies, with fewer jobs available and high numbers of people with fewer skills.
It explains that the weaker economies in northern cities mean fewer incentives to stay in the labour market as it warns low-skilled workers face greater disadvantages in the market for jobs.
In tackling the problem, the Centre for Cities calls on the government to deliver on its levelling up pledges to ensure jobs are available for those who have left the workforce.