Economists are worried about the significant number of people reporting themselves as being long-term sick, which contributes to rising levels of economic inactivity. The Office for National Statistics (ONS) reported a decrease in UK wages from October to December 2023, along with a slowdown in employment growth over the previous year. The average regular pay, excluding bonuses, fell to 6.2 percent from 6.6 percent in the quarter to November 2023, marking the slowest growth since October 2022. Real regular wages adjusted for inflation saw a 1.9 percent increase, attributed to a decrease in the inflation rate.
Chancellor Jeremy Hunt noted that while unemployment remains low and real wages are increasing, the work to drive people back into the workforce and stimulate economic growth must continue. The ONS reported that in October to December 2023, both the private and public sectors experienced worse annual average regular earnings growth in comparison to the previous quarter. The unemployment rate for those aged 16 years and over has returned to levels recorded a year ago, decreasing to 3.8 percent in the latest quarter.
The employment rate stands at 75 percent, below levels estimated from a year ago but an improvement from the previous quarter. The number of vacancies in the UK fell by 26,000 on the quarter to 932,000, representing the 19th consecutive quarterly fall. The ratio of vacancies to unemployment indicates a loosening labor market.
The ONS expressed concerns about the rising proportion of people neither working nor looking for work due to long-term sickness. The economic inactivity rate for people aged between 16 and 64 who are not in the labor force is at 21.9 percent. It is noted that economic inactivity increased over the COVID-19 pandemic due to illness and people staying in or entering education. The high number of long-term sick individuals is impeding economic growth, putting a strain on public finances and healthcare resources, and limiting opportunities for many people, according to experts. Ministries are urged to prioritize addressing these concerns and reversing this trend. Economic activity figures should be approached with caution due to low response rates in the Labor Force Survey.