The true level of unemployment

unemploymentJoblessness is being under-reported by a factor of 200 percent.

A joint study by the Organisation for Security and Cooperation in Europe (OSCE) and urban policy research unit Centre for Cities reveals that the true level of unemployment in Britain is not the official figure of 1.3 million usually quoted, but is actually closer to 4.5 million.

The difference between these two figures is explained by the government’s practice of excluding from jobless figures a host of adults who are classified separately as ‘economically inactive’.

This anodyne phrase encompasses people who are willing to work but not registered as jobless, people who have stopped looking for work on economic grounds, disabled people who could be working if the necessary support were available, people obliged by the lack of care facilities to leave the labour market and care for relatives, and people who have taken early retirement.

That figure of 4.5 million unemployed is for the whole of Britain, but that picture breaks down unevenly across the country. If you live in Oxford or Exeter, even with the ‘economically inactive’ included, there are fewer than 5 percent unemployed. But if you live in Liverpool, for which the officially recognised jobless figure is a mere 5.8 percent, then the real percentage of unemployment stands at 19.8 percent.

The figures for other big de-industrialised urban centres like Sunderland, Dundee and Birmingham reflect a similar level of jobless misery.

These figures should be remembered next time an establishment economist is heard expressing bafflement that the low unemployment rate is not matched by higher wages, offending against the law of supply and demand within the labour market.

There is no conundrum, just duff government arithmetic. (Richard Partington, ‘Unemployment figures should be 3 million higher, says research’, Guardian, 17 October 2019).