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Rapid deterioration in the Labour market

Inactivity

The government routinely seeks to target the parallel rise in inactivity as the cause of this rapid deterioration, and double down with increasingly punishing benefit sanctions. A separate commentary addresses the government’s frankly cruel approach to sick and disabled people. Instead the deterioration is likely a vicious cycle: consequence of the failed economic performance, and causal to the extent that failing health is undermining the ability of some to get back into work.

Inactivity due to long-term sickness remains at a record high at 2.82 million: up by 109,000 on the same quarter last year, and up by 818,000 on five years ago. The rise in economic inactivity due to long-term sickness has been steep for both men and women, but steeper among women. The number of women economically inactive due to long-term sickness has risen by 485,000 (46 per cent) over the past five years, compared to 333,000 (35 per cent) among men. Long-term sickness is now the most common reason for inactivity for both men and women, overtaking being a student for men and caring responsibilities for women.

In the specific terms of the labour market, with unemployment rising and jobs falling across the private sector (and also vacancies falling again to below 900,000) it is increasingly difficult to imaging there is a shortage of workers.

Real pay

With inflation slowing and hard-fought (nominal) pay gains holding up but moderating, real pay has been positive for some months. But to celebrate a momentary peak is to deny the underlying reality of failed real pay for sixteen years.

Average real pay growth ahead of the global financial crisis was 2.3 per cent a year, Average pay growth since the global financial crisis has been -0.1 per cent (both adjusting for inflation with CPI). Real pay hitting 2.4 per cent this month is meaningless in terms of the standard of life of working people.