More than a fifth of UK adults still not looking for work

More than a fifth of UK working-age adults are still not in work or actively looking for work, official figures suggest.

The UK economic inactivity rate was 21.5% in the three months to January, marking a drop from both the previous quarter and year, and is relatively low compared with trends since 2009.

However, the number of people not looking for work has been brought into sharp focus as the government brings in plans to try to boost UK economic growth.

The figures come after controversial plans to cut sickness and disability benefits were announced this week, and ahead of next week’s Spring Statement when Chancellor Rachel Reeves will give an update on her economic plans.

On Tuesday, the government announced sweeping cuts to sickness and disability benefits aimed at saving £5bn a year by 2030.

It says the measures will encourage people to work while protecting those who cannot.

But the reforms have faced fierce criticism from Labour backbenchers, unions and charities, who say the changes could push more disabled people into poverty.

Work and Pensions Secretary Liz Kendall said the latest employment figures “demonstrate the scale of the challenge we’re still facing to get Britain working again”.

Labour has targeted an employment rate of 80%. It currently stands at 75%.

The former John Lewis boss Sir Charlie Mayfield has been leading the Keep Britain Working review, which was commissioned by the government to look into the role of employers in health and disability.

“[Employers] need to create the environment so people can talk about the help they might need,” he told the BBC.

The UK needs to move from a disjointed system that focuses on what people can’t do to one that focuses on what they can do, he said.

“Being off work is not always the solution.”

The review found that there are 8.7 million people in the UK with a work-limiting health condition, an increase of 2.5 million over the last decade.

This includes 1.2 million 16 to 34-year-olds and 900,000 50 to 64-year-olds.

It also found that people who are out of work for less than a year are five times more likely to return to work compared to those who are out of work for longer.

The Office for National Statistics (ONS) has said its jobs figures should be treated with caution because of low response rates to its employment survey.

Nevertheless, it said economic inactivity – where people are out of work and not looking for work – has generally been falling since comparable records began in 1971.

It increased during the Covid pandemic, and has fluctuated around this increased rate.

However, economic inactivity for all age groups fell over the year by 0.6%, and fell 0.2% on the quarter largely because of more people aged 35 to 49 looking for work, the ONS said.

In its labour market release, the ONS said pay growth continued to outpace inflation.

Wages excluding bonuses grew 5.9% in the quarter, compared with the previous year, with retail, hospitality and construction wages seeing strong growth.

Redundancies rose for the first time in a year to 124,000 in the three months to January.

The Bank of England watches the pay and jobs data closely when making decisions on interest rates.

The central bank will be announcing its latest rates decision at midday when it is widely expected to hold rates at 4.5%.