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Media centre home > News > ‘Myth’ of full employment exposed

Issued:30/10/17

Report points to 2.3 million unemployed and to big regional and local disparities.

The real level of unemployment is just under 2.3 million, says a report published by Sheffield Hallam University.

This new estimate of unemployment compares with just under 800,000 on the official claimant count and 1.5 million on the government’s preferred measure of unemployment based on its Labour Force Survey.

Substantial unemployment remains hidden on incapacity benefits (mostly Employment and Support Allowance), says the new report.

More than 2.4 million men and women of working age are presently out-of-work on incapacity benefits.  Of these, an estimated 750,000 would have been in work in a genuinely fully employed economy, says the new report.

These are not fraudulent claims, the report explains. Rather, when men and women with health problems or disabilities are out-of-work they are often able to claim incapacity benefits instead of unemployment benefits.

The hidden unemployment is concentrated in the weakest local economies, particularly in the industrial areas of the Midlands, North, Scotland and Wales but also in a number of towns around the coast.  The consequence is that official figures hide the true scale of disparities across the country.

For a number of regions, the report’s estimates of the real level of unemployment are far above the government’s own preferred figure:

  •             North East  143,000 (compared with official figure of 91,000)
  •             North West  319,000 (compared with 177,000)
  •             Yorkshire  208,000 (compared with 132,000)
  •             Scotland  219,000 (compared with 121,000)
  •             Wales  141,000 (compared with 65,000)

These big differences also apply to many local authorities across the less prosperous parts of the country, for example:

  •             Middlesbrough 9,800 (compared with 5,800)
  •             Blackpool  10,400 (compared with 4,300)
  •             Liverpool  33,400 (compared with 15,000)
  •             Rhondda  14,600    (compared with 5,800)
  •             Glasgow  40,700 (compared with 17,200)
The Real Level of Unemployment

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By contrast, the report says there is little or no evidence of significant hidden unemployment in the most prosperous parts of southern England outside London.

Professor Steve Fothergill from Sheffield Hallam’s Centre for Regional Economic and Social Research, one of the authors of the report, said: “Unemployment has fallen over the last five years but the claim that Britain is operating at or close to full employment is wide of the mark.

“What our estimates of the real level of unemployment show is that big variations in the health of regional and local economies are still very much with us. Some parts of southern England may be close to full employment, but that is emphatically not the case in older industrial Britain, nor indeed in many seaside towns.”

NOTES TO EDITORS

1.    The new report, The Real Level of Unemployment 2017, by Christina Beatty, Steve Fothergill and Tony Gore, can be accessed by clicking here.

2.    The research on which the report is based was co-financed by the Joseph Rowntree Foundation.  The new report is the fifth in a series on the real level of unemployment, published at intervals since 1997

3.    For further details and interviews with the authors contact Martin Webb in the Sheffield Hallam University press office on 0114 225 2621.