UK lags behind developed nations in post-Covid employment recovery

The UK is expected to be the only country in the developed world where employment is still below pre-pandemic levels in early 2023, new analysis suggests.

A rising number of people taking early retirement, worsening health problems, and reduced international migration have all contributed to the steady increase in the number of working-age adults who are neither job-seeking, post-pandemic.

This surge in economic inactivity means the labor force has shrunk, with 600,000 more Brits unemployed than before the coronavirus outbreak, despite unemployment at a record low.

Although the UK has historically had one of the highest employment rates in the OECD group of countries, it is slipping rapidly in the international rankings, falling from sixth to 12th place in two years, according to a report by the Institute for Employment Studies Think- tank showed.

Line chart of working age employment rate* since Q4 2019 (% points), showing UK employment is still below pre-pandemic levels

The UK’s working-age employment rate is 75.5 per cent, up from 76.5 per cent at the end of 2019. The 1 percentage point fall means the post-pandemic labor market recovery is weaker than in any other country except Switzerland and Latvia , the consulting firm said.

Across the EU, employment rates are on average 2 percentage points higher than before the Covid crisis. With employment also recovering quickly among the other laggards, the UK is on track to be the only developed country with fewer jobs than before the pandemic by early 2023.

The IES said there was concern about the sharp rise in the number of people who had fallen into long-term inactivity and had not worked for several years – many of whom were suffering from poor health, suggesting that Covid has been keeping the workforce busy for a long time 30,000 could have mined .

With labor shortages likely to persist due to demographic pressures, it is all the more important to improve support for those wishing to return to the labor market.

“A lot of attention has been paid to why so many people have exited the labor market since the pandemic began, but the key question now is how are we going to help people come back,” said Tony Wilson, director of the IES, which is launching a long-term project to improve employment employment promotion.

A new survey commissioned by the IES found that just one in six employers had used the government’s Jobcentre Plus service to fill vacancies in the past two years. Just one in five job seekers used the service, compared to more than half a decade ago – and of those, just a third thought it had helped them find a job.

Most of the unemployed would not have access to government support through this service as it focuses on beneficiaries who are required to seek work rather than inactive people living on their own means.

The IES also highlighted the UK’s relatively poor performance in promoting employment for older people and people with disabilities. If the UK did as well as the top-performing countries in the OECD, there would be almost a million more people in work, with an employment rate of over 80 percent, the research says. UK lags behind developed nations in post-Covid employment recovery

Adam Bradshaw

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