As Sir Keir Starmer pushes for economic growth, the unemployment crisis he inherited from Rishi Sunak continues to worsen.
About 9.5 million people of working age are neither in work nor looking for work. They are economically inactive, in the terminology of the Office for National Statistics.
That’s terrible news for the prime minister, who will struggle to grow GDP when so many adults in the country are no longer even interested in working.
The figures also show the causes of another crisis: the migration figures.
Bosses are desperate to hire more staff, but as British-born adults drop out and stop looking for work, businesses and the public sector are being forced to offer jobs to people born elsewhere.
More than a million foreign workers have arrived in Britain since the eve of the Covid crisis, adding to concerns about migration, increasing pressure on public services and raising the risk of a labour market crisis if the UK suddenly becomes a less attractive place for emigrants.
Since the pandemic hit, the number of economically inactive people has increased by more than 1 million.
If we break that figure down by place of birth, then UK-born people account for 833,000 of the increase, with 230,000 people born in other countries. That is to say that the overwhelming increase in unemployment has been caused by those born in the UK.
The biggest driver of the increase in inactivity since 2019 has been long-term sickness – people saying they are too ill to work. The number of students has also risen sharply. Most of the increase in inactivity among people born in other countries can be explained by the increase in students. But that only accounts for a third of the increase in unemployment among people born in the UK.
At the same time, the number of British-born people in employment has fallen by 967,000 since the end of 2019, while the number of UK workers born elsewhere has increased by just over 1 million.
That means that British-born people account for just under 80 per cent of all employment in Britain, up from 82 per cent on the eve of the pandemic and 92 per cent at the start of the century.
This fall in employment for people born in the UK has come despite bosses being desperate to hire new staff.
At the peak of the hiring boom in 2022, there were 1.3 million vacancies available.
That has now dropped to 884,000, but is still above the pre-pandemic level of around 810,000.
This means that the economy is still struggling with unemployment as employers fail to convince people to take on the jobs that are so desperately needed.
Petra Tagg, director of recruiter ManpowerGroup UK, says “employers are struggling to realise their growth ambitions”.
“A lack of labor force participation of working-age people continues to hamper economic growth,” she says.
Alexandra Hall-Chen from the Institute of Directors says “the availability of skills and labour remains a pressing issue for employers, with economic inactivity significantly higher than before the pandemic”.
This is a problem big enough to impact the entire economy.
“Without effective measures to get more people back to work, sustainable economic growth will be virtually impossible,” she says.
Rachel Reeves, the finance minister, has promised action and taken a tough line on benefit claimants.
“Today’s figures show that more can be done to help people into work, because if you can work, you should work,” she says.
“This will form part of my Budget later this year, where I will make tough decisions on spending, welfare and tax to rebuild the foundations of our economy so we can rebuild Britain and leave every part of our country better off.”
Although the net fall in employment and rise in inactivity among UK-born workers appear to be broadly similar, it is not the case that the vast majority of a million people move from one status to the other and stay there.
Every year people retire, others move abroad, new workers enter the workforce fresh from school or university, Britons who have worked or travelled abroad return home, so there is a lot of turnover among people.
Similarly, the rise in the number of migrants in the UK has closely matched the decline in British-born jobs. That doesn’t mean those migrants are doing exactly the same jobs as the Britons who were working before – people move, change jobs and climb the career ladder, while the needs and demands of bosses change, so some jobs are created and others disappear over time.
But when you look at the overall economic pattern, the picture is clear. Fewer British-born people are working. And foreign-born workers are filling the gap.
According to Neil Carberry, chief executive of the Recruitment and Employment Confederation, employers have little choice but to look abroad.
“Someone who is willing to move to another country to work is very motivated to work – they come here and look for a job,” he says.
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