FALLS in unemployment to historic lows are masking a growing problem of inactivity in the economy: almost eight million Britons of working age are out of the jobs market.
Yesterday, economists and opposition politicians highlighted surging numbers of economically inactive people. They said that the trend means the labour market is not nearly as healthy as headline official figures imply. The latest numbers show that while the jobless rate continues to slide, 73,000 more people of working age became economically inactive in the three months to the end of July. Over the year to July, the total has leapt by 148,000.
A particular concern is the rising numbers of people aged 16 to 24 who are idle.
Despite the Government’s New Deal for the young jobless, more than 406,000 people under 25 were unemployed and not in full-time education in the three months to July. A further 663,000 were economically inactive and not in full-time education.
David Willetts, the Shadow Work and Pensions Secretary, called for action to tackle youth unemployment.
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Earlier, official data showed a further 6,100 drop in the number of people out of work and claiming benefits to just 830,200, the lowest since 1975.
In spite of the low jobless count, pay pressures remained benign. Headline growth in average earnings growth slowed to 3.8 per cent in July, down from June’s 4.3 per cent.
Stephen Nickell, a senior member of the Bank of England’s Monetary Policy Committee, said that the latest figures for the property market and high street activity in August were softer than expected.
“If the weakening trend continues then interest rates might not have to go up by much more,” said.