UK jobless rate falls as workers drop out of labour force

Britain’s jobless rate unexpectedly fell in the three months to January, a change that partly reflected people giving up their job hunt as lockdown measures tightened at the start of the year, official figures showed on Tuesday. The main jobless rate dropped to 5.0% in the three months to January from 5.1% in the final quarter of 2020, in contrast to forecasts in a Reuters poll for a small rise to 5.2%. None of the economists polled had expected a fall.

Part of the drop in the headline unemployment rate was due to high jobless numbers for October alone dropping out of the three-monthly figures. The drop also reflected an increase in the proportion of the potential workforce classed as ‘inactive’, such as students, parents looking after their children full time and people who have temporarily given up looking for work.

This ‘inactivity rate’ rose by 0.3 percentage points over the past three months to 21.0%, its highest since early 2019, while the share of people in employment fell by 0.3 percentage points over the same period, equivalent to a drop of 147,000. Since January non-essential shops and most businesses open to the public have been closed in England to slow a surge in more infectious variants of COVID, with similar measures in other parts of the United Kingdom.

Last month the government extended furlough support – which currently pays the wages of one in five employees – until the end of September. Without furlough, Britain’s jobless rate would be far higher. A rapid roll-out of vaccinations has sharply reduced new infections and allowed English pupils to return to school this month. Shops are due to reopen next month, but restrictions on hospitality will remain until at least late June.

UK jobless rate falls as workers drop out of labour force, Reuters, Mar 23