Business
More than a fifth of UK not looking for work
More than a fifth of working-age adults in the UK are deemed not to be actively looking for work, figures suggest.
The UK’s economic inactivity rate was 21.8% between November and January, marginally higher than a year earlier.
It means 9.2 million people aged between 16 and 64 in the UK are not in work nor looking for a job. The total figure is more than 700,000 higher than before the coronavirus pandemic.
Concerns have been raised over worker shortages affecting the UK economy.
The health of the UK economy is in the spotlight with the general election set to be called in the coming months and both major political parties pledging to boost growth.
The UK fell into recession at the end of last year when the economy shrank for two consecutive three-month periods, but latest official statistics showed the level of unemployment remained steady. The figure also showed that wage rises slowed again, although pay is still outpacing inflation.
However, the number of people not employed or actively looking for work has remained at a persistently high level in recent years since it first surged during the pandemic.
Long-term illness has been cited as the main reason for about a third of the working-age inactive population not being in the labour force.
But other groups placed in the bracket – defined differently to unemployment – by the Office for National Statistics (ONS) include students, people who look after family or a home, people with disabilities, and early retired and discouraged workers.
More women still tend to be classed as economically inactive compared to men, but the gap has narrowed since records began in the early 1970s, largely due to more women entering the workforce.
The ONS said its latest figures suggested the number of people inactive due to being sick fell in recent months, but remained higher than estimates a year ago.
It added there had been an increase in people aged 16 to 34 becoming economically inactive, but that the number aged 35 to 64 had fallen. A recent report suggested people in their early 20s were more likely to be not working due to ill health than those in their early 40s, with cases of poor mental health believed to be on the rise.
Workforce shortages have led to Chancellor Jeremy Hunt setting out a series of measures, most recently in his Budget last week, aimed at encouraging people to find work, or increase hours.
Policies outlined include reducing the starting rate for National Insurance Contributions from 10% to 8% for 27 million workers from 6 April, along with an extension of free childcare services for working parents.
But business groups said more needed to be done to get more people into work amid concerns over the UK’s long-term weak economic growth.
Neil Carberry, chief executive of the Recruitment and Employment Confederation, added that cutting NI rates was the “right call”, but would not be a “silver bullet to encourage enough people to work”.
“To get inactivity down government needs to look at childcare, transport and address NHS waiting lists,” he said. “The Budget didn’t add up to the industrial and workforce strategy we really need despite the chancellor’s obvious interest in workforce matters.”
Alexandra Hall-Chen, principal policy adviser for employment at the Institute of Directors, said many companies were “still struggling to access the skills they need”.
“A future government should place tackling skills shortages and increasing labour force participation at the centre of its growth plan,” she added.
‘Disconnect between employers and young people’
Chris Bingham, chief executive of energy supplier Greenarc Ltd in West Yorkshire, said businesses need to think about how to encourage people into the workforce, and “give them more of what they want”, especially to younger employees.
He said that people aged 16 to 24 had their education disrupted by the pandemic. “They’re coming into a workforce and business community that itself is still struggling to understand how we’re all going to work post-Covid,” he told the BBC’s Today programme.
“I think there’s a clear disconnect between the employer and young employees,” he added, arguing that any future government needed to put a “bigger focus on apprenticeships and workplace engagement as opposed to a blanket university route”.
Work and Pensions Secretary Mel Stride told the BBC that the UK had a “very healthy” labour market and that the government’s “plan is very much baring down on economic inactivity”, adding that the UK had a lower inactivity rate than the US, France and Italy,
The government’s official forecaster, the Office for Budget Responsibility (OBR), which has estimated that policies on childcare expansion, welfare reform, and personal tax cuts are predicted to increase the UK’s labour supply by more than 300,000.
But the OBR has said that personal tax thresholds being frozen “will also weigh on work incentives”, meaning the increase would be closer to 200,000.
Richard Hughes, chair of the OBR, told a committee of MPs on Tuesday that people being out of the workforce for health reasons “is now the single largest reason”, and added it was “worrying” for economy.
“If they’re not working, they’re not paying tax, and they’re also more likely to be on benefits,” he said.
Liz Kendall, Labour’s shadow work and pensions secretary, said millions of people were “locked out of work” due to long-term sickness on the “Tories’ watch”.
She said Labour would cut NHS waiting lists as part of a plan to get more people working.
As well as the economic activity figures, the ONS also revealed:
- The unemployment rate remained steady at 3.9% in the three months from November to January, which was marginally higher than economists had forecast
- Growth in regular pay, which excludes bonuses, slowed again, but at 6.1% is still outpacing inflation, the rate prices rise at, by 2%
- There were 203,000 working days lost because of strike action across the UK in January 2024
- Job vacancies from December to February 2024 were down by 224,000 from the previous year but they remained 107,000 above pre-Covid levels.
The ONS has issued warnings over the reliability of its jobs market data, with the survey upon which its results are based on having a smaller number of respondents than has historically been the case.
Questions over the data on the jobs market raise issues for the Bank of England, which uses the ONS’s releases to gauge the health of the UK economy.
How to get a job: Expert tips for finding work
- Search beyond a 40 mile radius
- Use key words in your searches
- Don’t wait for a job to be advertised
- Sell your skills not your years
Read more here.
— Reports /TrainViral/
The prospective new owner of Royal Mail has said he will not walk away from the requirement to deliver letters throughout the UK six days a week, as long as he is running the service.
“As long as I’m alive, I completely exclude this,” Czech billionaire Daniel Kretinsky told the BBC.
Mr Kretinsky has had a £3.6bn offer for Royal Mail accepted by its board.
Shareholders are expected to approve the deal in the coming months, but the government also has a say over whether it goes ahead.
Currently the Universal Service Obligation (USO) requires Royal Mail to deliver letters six days a week throughout the country for the same price. But questions have been raised over whether the service could be reduced in the future.
In an exclusive interview with the BBC, Mr Kretinsky also said he would be willing to share profits with employees, if given the go-ahead to buy the group.
However, he appeared to reject the idea of employees having a stake in Royal Mail, which unions have called for in exchange for their support.
The Royal Mail board agreed a £3.6bn takeover offer from Mr Kretinsky in May for the 500-year-old organisation, which employs more than 150,000 people. Including assumed debts, the offer is worth £5bn.
But because Royal Mail is a nationally important company, the government has the power to scrutinise and potentially block the deal.
As well as keeping the new government on side, Mr Kretinsky also faces the task of convincing postal unions that the proposed deal will benefit employees.
The USO is a potential sticking point for both the government and unions.
Royal Mail is required by law to deliver letters six days a week and parcels five days a week to every address in the UK for a fixed price.
How well this has actually been working in practice is a different matter. Ten years ago, 92% of first class post arrived on time. By the end of last year it was down to 74%, according to the regulator Ofcom.
Last year the regulator fined Royal Mail £5.6m for failing to meet its delivery targets.
Royal Mail has been pushing for this obligation to be watered down. It wants to cut second class letter deliveries to every other weekday, saying this will save £300m, and lead to “fewer than 1,000” voluntary redundancies.
‘Unconditional commitment’
Mr Kretinsky has committed in writing to honouring the USO, but only for five years.
And after that, in theory, the new owners could just walk away from it.
However, Mr Kretinsky told the BBC: “As long as I’m alive, I completely exclude this, and I’m sure that anybody that would be my successor would absolutely understand this.
“I say this as an absolutely clear, unconditional commitment: Royal Mail is going to be the provider of Universal Service Obligation in the UK, I would say forever, as long as the service is going to be needed, and as long as we are going to be around.”
Mr Kretinsky added that the written five-year commitment was “the longest commitment that has ever been offered in a situation like this”.
Another potential stumbling block for the deal, however, is how the company will be structured.
Unions would like to see the company renationalised, but Dave Ward, general secretary of the Communication Workers Union (CWU), told the BBC that would be “difficult in the current political and economic environment”.
Instead, what the CWU is pushing for is “a different model of ownership” – that is, where the employees part-own the business.
To get its support for the takeover, the union wants employees to share ownership of the company, along with other concessions including board representation for workers.
It says profit sharing is “not going to be enough to deliver our support and the support of the workforce”.
If the union doesn’t get what it wants, it won’t rule out industrial action, Mr Ward said. Its members went on strike in 2022 and 2023.
Although Mr Kretinsky said he is “very open” to profit sharing, he is not in favour of shared ownership.
“I don’t think the ownership stake is the right model,” he said. “The logic is: share of profit, yes, [but an] ownership structure creates a lot of complexity.
“For instance, what happens if the employee leaves? He has shares, he is leaving, he is not working for the company, he [still] needs remunerating.”
Mr Kretinsky said he didn’t want to create “some anonymous structure” but instead “remunerate the people who are working for the company, and creating value for the company”.
The union is also concerned about job losses and changes to the terms and conditions of postal workers’ contracts.
Mr Kretinsky has guaranteed no compulsory redundancies or changes in terms and conditions but only until 2025.
“If we are more successful, and we have more parcels to be delivered, we need not less people, but we need more people,” he said. “So really, job cuts are not part of our plan at all.”
He said if the management, union and employees work together, “we will be successful”.
Another concern is the potential break-up of the business.
The profit for Royal Mail’s parent company last year was entirely generated by its German and Canadian logistics and parcels business, GLS. Royal Mail itself made a loss.
Mr Kretinsky has promised not to split off GLS or load the parent company with excessive debt, although borrowings will rise if the deal goes through.
But he has a way to go to convince the CWU.
“I can’t think of any other country in the world that would just just hand over its entire postal service to an overseas equity investor,” Mr Ward of the CWU said.
However, Mr Kretinsky said that the postal unions “do understand that we are on the same ship, and that we need this ship to be successful, and that if we are there, we don’t have any real problems to deal with, because the sky is blue, and it’s blue for everybody.”
The union cannot stop this deal but the government can block it under the National Security and Investment Act.
Business Secretary Jonathan Reynolds has said he will scrutinise the assurances and guarantees given and called on Mr Kretinsky to work constructively with the unions.
Mr Kretinsky may say that he and the unions are ultimately on the same ship but, as things stand, they are not on the same page.
Who is Daniel Kretinsky?
Daniel Kretinsky started his career as a lawyer in his hometown of Brno, before moving to Prague.
He then made serious money in Central and Eastern European energy interests.
This includes Eustream, which transports Russian gas via pipelines that run through Ukraine, the Czech Republic and Slovakia.
He then diversified into other investments, including an almost 10% stake in UK supermarket chain Sainsbury’s and a 27% share in Premier League club West Ham United.
The Czech businessman is worth about £6bn, according to reports.
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