Unemployment across the UK is three times higher than official figures suggest, a think tank has warned, amid a shortage of high-quality jobs which is plaguing Britain’s labour market.
The UK's official rate of unemployment is 3.7pc, but this triples to 12.1pc when accounting for the three million people who have left the workforce “involuntarily”, according to the report by the Centre for Cities.
This is because the official rate only measures those who are actively looking for employment and does not include people who are neither in work nor looking for a job, such as students, pensioners or carers.
Paul Swinney, a director at Centre for Cities, said: “When we look at that very specific element of economic inactivity, we see that there's a large number of those people that could be in the jobs market.
“So the potential workforce will be much larger than what it currently is.”
These may be people who stop looking for a job if they are discouraged, believe there are no jobs or struggle to work because of health issues, the think tank said.
It said the Government must focus on boosting skills and supporting job creation as part of delivering its levelling up strategy.
Andrew Carter, chief executive of Centre for Cities, said: “With the UK now likely to enter a recession, the Government must address its insufficient action on levelling up so far and act swiftly to create more opportunities to get people back into the labour force.
“This will require setting out and implementing an agenda that delivers much-needed investments in skills and public services, while supporting job creation in struggling places.”
Chancellor Jeremy Hunt made a special appeal to Britons who have dropped out of the labour force in a speech last week, urging them to return to work.
He said: “To those who retired early after the pandemic or haven't found the right role after furlough, I say Britain needs you.
“We will look at the conditions necessary to make work worth your while.”
The UK’s employment rate remains one percentage point below its pre-Covid level at 75.6pc, making it an outlier among advanced economies.
But while many businesses report that they are struggling to find enough workers, Centre for Cities said many urban areas face “a long-term jobs shortage problem rather than a short-term lack of workers”.
Many of the people the Chancellor wants to return to work would be based in the North of England, the analysis found, but face the greatest barriers to doing so.
Mr Swinney said: “If you look at the geography of it, what we see is that this army of hidden workers is much larger in northern towns and cities than in southern ones.”