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Officials Say True UK Unemployment Rate Should Be Higher

Published By Team AdaptiveWork

The headline figures on the UK employment rate suggest that the country is experiencing its lowest unemployment since records began. This is despite the challenges being posed by international trade tensions and the Brexit drama Britain has faced for the past few years. The fact that the UK workforce is also at last seeing real wage growth seems to be a positive sign for the country’s prospects, no matter the outcome of its future relationship with the European Union.

Unemployment rate not all as it seems

Research from the Organization for Economic Co-operation and Development (OECD), however, has threatened to cast a less favorable light on the UK employment rate. Through new research, the international economic group has suggested that the real unemployment rate of the country shouldn’t be 4.6% but 13.2%, nearly three times the amount reported by the UK’s Office of National Statistics (ONS).

They come to this figure by using a different methodology for measuring the UK workforce. The OECD’s methodology includes people who:

  • Are currently out of work due to disability or health issues but could work with support
  • Are forced to take care of family due to the absence of appropriate care facilities
  • Can’t search for jobs because of economic reasons
  • Would be capable of work but took early retirement
  • Have become disillusioned with their chances of finding a job and have left the labor force

When taken into account, these factors would increase the number of unemployed people who are not in education by three million from its current number of 1.3 million.

What it means for the most affected areas

The “hidden joblessness” uncovered by the OECD would seem to mainly affect those areas, towns and cities of the UK which have already felt the worst effects of Britain’s deindustrialization since the 1980s. While areas of the south and south-east of the country (including London) recorded the lowest adjusted rates for unemployment, the biggest increases were to be found in the north-west, north-east and Scotland. Liverpool alone had the highest amount of hidden unemployment, with almost one-fifth of eligible citizens not involved in education being out of work.

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Concerns for the future

The figures from the OECD are interesting for what they reveal about not just the possible cohorts of UK society who are missing out on its economic boom, but also the areas of the country which are being left behind. As Andrew Carter, the chief executive of the Centre for Cities, a think tank dedicated to improving the performance of UK city economies, stated about the findings: “This research suggests that people in cities which have struggled to recover from the deindustrialization of the 20th century could be dealt a second blow as they are ill-equipped to respond to automation.” This suggests that the future prosperity of Britain could be hampered by not having a workforce equipped to deal with the changes necessary for succeeding in a modern economy, such as the move to software-based collaboration.

In response, the ONS has disagreed with the OECD’s findings, stating that they believed their own methodology was the most appropriate and internationally accepted, while the new methodology would not be fit for purpose as a measure of unemployment.

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Written by Team AdaptiveWork