Press Story

The official figures show that employment fell by 68,000 and unemployment rose by 44,000 in the last quarter. But even more worrying is that the number of people classified as economically inactive - that is, neither in work nor looking for work - rose by 93,000. In the last two years, this number has gone up by 300,000 to reach 9.4 million.

The 93,000 rise includes 49,000 people choosing to retire early. The number of people economically inactive because of early retirement has now reached 1.57 million, the highest figure since comparable records began in 1993.

This increase, combined with increases in the number of younger people on inactive benefits, will make the deficit harder to reduce, because it means higher welfare bills and fewer people paying taxes.

Tony Dolphin, Senior Economist at ippr said:

'These latest figures shows that the employment landscape is looking so bleak that increasing numbers of people are giving up the search for work altogether.
While the vast majority of people who lose their job do manage to find a new one, people who give up looking for work are much less likely to ever re-enter the labour market. There is a real risk that we are going back to the recessions of 1980s and 1990s when hundreds of thousands of people retired early or went onto long term benefits because they saw no prospect of getting a job. During that period the numbers on incapacity benefits trebled - and we have lived with the consequences ever since.
As well as ruining individual lives, long-term worklessness blights communities and destroys the future prospects of young people. The government must use the welfare reform bill to outline ways in which more people can be kept in work or found work and the budget must include a bold strategy for growth and job creation.'

Contact

Tim Finch, Director of Communications: 020 7470 6110 / 07595 920899 / t.finch@ippr.org