Real Rate of Unemployment

A lot of focus has featured on why inflation is so high. A more interesting question is why is unemployment not higher given depth of recession and also, the number who are economically inactive.

The employment rate in the UK is currently 72.3%. The employment rate is the % of those of working age in employment, (it also includes part time employment). This means we have 27% of the working age population not in employment. This includes
unemployed (either claiming JSA or unemployed by Labour force survey)


Those in full time education taking early retirement
Left the labour force - e.g. mothers bringing up children, those on disability allowance.Obviously, if people leave labour force to study, this can be beneficial in long term. But, if a significant proportion of workforce are pushed on to disability allowance or take early retirement this represents significant lost output for economy.Despite the recession, there are quite a few reasons why unemployment is not higher
cost of redundancy.
Increase in student numbers to avoid a saturated job market.
Underemployment - people working less hours than they would like
Recession hit hardest sectors of the economy which were less labour intensive e.g. finances rather than manufacturing.