UK unemployment and economic inactivity have continued to grow, the latest official labour market figures have shown.

According to the Office for National Statistics (ONS) UK labour market bulletin for May 2024, the unemployment rate in January to March 2024 was estimated at 4.3% – a seven-month high – while the economic inactivity rate was 22.1%.

Redundancies have increased by 7% compared with the same period last year, but were 26% lower than the previous quarter.

This larger pool of available candidates was competing for fewer jobs, as the estimated number of vacancies in February to April 2024 decreased by 26,000 to 898,000. This was the 22nd quarterly decrease in job postings in a row, with vacancies falling in 13 of 18 monitored sectors including information and communication and manufacturing, but the ONS pointed out vacancies are still above the pre-pandemic average.

Annual growth in employees’ average regular earnings, excluding bonuses, was 6% in January to March, while total pay including bonuses grew 5.7%. Adjusted for CPIH inflation,  regular pay grew by 2% while total pay growth was 1.7%.

Commentators were alarmed by the continued rise in economic inactivity.

Recruitment and Employment Confederation chief executive Neil Carberry said: “Unless we can better tackle inactivity, including long-term health issues, and find ways to be more productive with technology and skills, the UK will not grow as it could. Given that higher growth is the secret sauce for lower taxed and better funded-public services, every party should have the workforce at the heart of its thinking.”

Julia Turney, a partner and head of platform and benefits at Barnett Waddingham, said: “With GDP bouncing back from recession and an interest rate cut now priced in for the coming months, today’s rise in job figures runs counter to the story of an economic recovery. This economic inactivity threatens to impede our growth plans.

“Employers should consider the barriers preventing people from entering and returning to the workforce, including those related to wellbeing. Taking a less rigid approach to the work day could be just what’s needed to help employees balance their rehabilitation needs and mental health requirements. Businesses should evaluate the effectiveness of these initiatives on an ongoing basis to identify what approaches are working and where adjustments are needed.”

Ben Harrison, director of the Work Foundation at Lancaster University, said the government’s plans to tighten welfare benefits risked pushing people with long-term conditions further away from the workforce.

“Since January to March 2023, on average, the number of people who are economically inactivity due to ill health has risen by 295 people a day. It is vital that the government works closely with employers and other agencies to stem the flow of people who are leaving work due to sickness,” he said.

“And as one in three people (633,000) who are long-term sick report they want to work, the government must prioritise de-risking the journey back to secure and sustainable work for those people with tailored employment support.”

The CBI’s director of future of work, Matthew Percival, was concerned about the impact pay increases could have on the wider economy.

“While there continue to be signs of the labour market cooling, it is still overheating and there is not yet any indication that pay rises are reducing to a level compatible with easing inflation and reducing interest rates,” he said.

The CIPD wanted to see more investment in upskilling workers, said James Cockett, the HR body’s labour market economist. “With more people staying put, it will be important for employers to invest in workplace skills to support and develop their existing workforce,” he said.

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