Unemployment figures should be 3m higher, says research
OECD and Centre for Cities study indicates there are ‘hidden’ numbers
Richard Partington Economics correspondent
Thu 17 Oct 2019 00.01 BSTLast modified on Thu 17 Oct 2019 12.30 BST
Millions more people in Britain are without a job than shown by official unemployment figures, according to a study that suggests the jobless rate should be almost three times higher.
According to research from the Organisation for Economic Co-operation and Development (OECD) and the Centre for Cities thinktank, large levels of “hidden” unemployment in towns and cities across Britain are excluded from the official government statistics.
The study found that more than 3 million people are missing from the headline unemployment rate because they report themselves as economically inactive to government labour force surveys.
It said the true unemployment rate should rise from 4.6% to 13.2% of the working-age population not in education. The OECD made the estimate by creating an adjusted economic activity rate, which removes students, retirees and people caring for family.
The adjusted rate accounts for inactive people who may be willing to work or have stopped looking for work for economic reasons; such as people with health issues or a disability who could work with support, those who take care of relatives due to a lack of access to care facilities, people who have taken early retirement, and people who think there are no available jobs.
In a stark analysis of joblessness across the country, the assessment raises the total number of people out of a job who could work from the official level of 1.3 million to almost 4.5 million.
The Centre for Cities said that urban locations faced the highest levels of hidden joblessness. Liverpool had the highest rate in the country, with around one in five working-age adults not in education finding themselves out of work.
At 19.8% compared to 5.8% on official statistics, joblessness in the city ranked just ahead of Sunderland, Dundee, Blackburn and Birmingham.
All the top 10 cities with the highest adjusted economic inactivity rates were found to be outside London and the south-east, and all tended to have weaker economies. In contrast, cities across the south-east had much lower jobless rates, with Crawley recording the lowest adjusted rate of just 2%. Oxford and Exeter were also below 5%.
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Andrew Carter, chief executive of the Centre for Cities, said: “It is possible that the unemployment rate in Britain’s cities is far higher than official figures suggest. This research suggests that people in cities which have struggled to recover from the deindustrialisation of the 20th century could be dealt a second blow as they are ill-equipped to respond to automation.”
A spokesperson for the Office for National Statistics, which produces the official estimates of unemployment in Britain, said its headline figures were based upon internationally agreed definitions, which includes those both looking for and available to start work.
“If the definition were widened, for example by including people not looking for work because of health problems, it would stop being a measure of spare employment capacity,”