Recent research highlights a concerning deterioration in the economic health of the UK’s workforce, attributed to rising unemployment levels and increased economic inactivity. This is having a knock-on effect on UK inflation rates, increased pressure on the benefit system, and decreasing tax revenues.
From December to February, the economic inactivity rate for those aged 16-64 increased to 22.2%. Over 9 million individuals are now unemployed and not actively seeking work, an increase of 150,000 from the previous quarter. This trend is likely due, in part, to a rise in full-time students and an increase in people unable to work because of long-term illness.
Solution-focused actions are urgently needed to reverse these trends. Government policymakers must address these issues proactively, for instance, through economic stimuli and constructive healthcare and education reforms. Flexible work environments for those battling illness and part-time or remote opportunities for students may also prove beneficial.
Ben Harrison from the Institute for Employment Studies warns that the UK workforce is becoming ‘sicker and poorer.
Deteriorating workforce health impacting UK inflation
Harrison notes that precarious employment, increased poverty among working households, and low wages against high living costs deepen problems for the UK job market. Recommendations for tackling these issues include improved working conditions, job security, healthcare access, and fair wage practices.
Alexandra Hall-Chen from the same Institute suggests increasing government-funded childcare to boost workforce participation. Assisting families with affordable childcare would help fill labor market gaps and reduce socio-economic disparities, simultaneously driving economic growth.
Meanwhile, central banks globally, including the Bank of England, are being criticized for not raising interest rates to tackle inflation. However, experts warn that abrupt increases might destabilize the economy further. Financial experts stress the necessity of cautious economic measures as the country navigates the pandemic’s lingering effects.
In this precarious situation, the Bank of England must carefully weigh the potential short and long-term consequences of any actions. During these challenging times, a prudent and patient approach toward economic recovery is needed.
