UK’s workforce shrinks by fastest rate in G-7 since pandemic

LONDON

The UK has had the lowest workforce participation rate among G-7 countries since the coronavirus pandemic began, according to data released Thursday.

The percentage of working-age adults in the UK either employed or actively seeking work was 78.6% in the last quarter of 2022 compared to 79.5% in the same period in 2019, with over 500,000 people leaving the workforce due to long-term illness, according to the Organization for Economic Co-operation and Development (OECD).

The UK is also one of only seven countries in the 38-member OECD where labor market participation remains lower than pre-pandemic levels.

Employers in the UK are struggling to fill near-record vacancies due to a sharp increase in economic inactivity since the start of the pandemic, with half a million more people now inactive compared to February 2020.

This increase is mainly due to older workers leaving the job market and long-term sickness, with over 2.5 million people out of work due to ill health.

The Bank of England suggested that the rise in National Health Service waiting lists and underinvestment in health and social care could be contributing to this trend.

Andrew Bailey, the bank's governor, has recently warned that failure to address this issue could lead to inflationary pressures as companies increase wages to attract and retain staff.

Despite the workforce participation rate in the UK being lower than pre-pandemic levels, other OECD countries have seen an increase, with the average participation rate reaching its highest level since 2008.