The UK workforce expanded in the three months to February, driven by young people leaving full-time education and moving into work, but the longer-term problem of rising ill-health continues to worsen, the Resolution Foundation said in response to the latest ONS labour market statistics yesterday.
The UK workforce continued to expand in recent months, with employment up 170,000 on the quarter, and economic inactivity down 230,000. The fall in inactivity was driven by full-time students: the number of people inactive due to being a full-time student was down 180,000 on the quarter.
The labour market has loosened overall, with short-term unemployment (up to 6 months) rising by 52,000 to above normal pre-pandemic levels, and vacancies falling by 47,000 on the quarter.
Less encouragingly, inactivity among older workers aged 50-64 remains high – up 298,000 on pre-pandemic levels – while the number of people inactive due to ill-health rose to a record high of over 2.5 million.
Reversing this trend – which predated the pandemic – is a huge priority that is likely to take years to address, says the Foundation, and a key test of the new Health and Disability White Paper.
Nominal pay growth strengthened in February, driven by the gap between public-sector (5.3 per cent) and private sector (6.1 per cent) pay growth closing. However, with inflation still at double digits, pay packets continue to shrink in real terms.
Louise Murphy, Economist at the Resolution Foundation, said: “Britain’s workforce continued to expand in early 2023 as thousands of full-time students moved into work. But while the young entered work, but the old and sick did not. Reversing these trends are a major problem for policy makers across government to confront.
“Strong growth in the public sector has helped to close the gap in pay growth with the private sector. But the picture remains that almost all workers across Britain are seeing their pay packets shrink in real terms, which will continue for the foreseeable future.”
Commenting on the Resolution Foundation’s Low Paid Britain Report, which criticises the UK’s lack of decent sick pay, TUC General Secretary Paul Nowak said: “Nobody should be plunged into financial hardship if they become sick.
“But Britain has one of the most miserly sick pay rates in Europe.
“This is disproportionately punishing low-paid workers and leaving them without a safety net.
“We must fix our broken sick pay system by making statutory sick pay available from day one and raising it to the level of the real living wage.
“The lack of decent sick pay cost us dear during the pandemic. The government should have learned this lesson.”
On the need for a higher minimum wage and sector-wide fair pay agreements, Paul Nowak added: “Let’s not kid ourselves. Low-paid workers remain under huge financial strain.
“Energy bills have shot up by £67 a month and food prices are through the roof.
“It’s time to put an end to low-pay Britain once and for all. That means getting the minimum wage to £15 per an hour as soon as possible.
“And it means introducing industry-wide fair pay agreements so that all workers have a minimum set of pay and rights.”
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