A report released today by researchers at Sheffield Hallam and Warwick Universities, both in the UK, challenges official claims that unemployment is now below one million.
The report shows that there is extensive ‘hidden unemployment’ in many parts of Britain and argues that the real level of unemployment is actually around 2.8 million.
The researchers explain how large numbers of people have been diverted away from unemployment-related benefits (mainly Jobseeker’s Allowance) onto other benefits or out of the benefits system altogether. These people are therefore excluded from the official monthly unemployment figures, which count only the people claiming unemployment benefits.
In particular, the research highlights the very large number of unemployed people with health problems who have been diverted onto sickness-related benefits, mainly Incapacity Benefit. The hidden unemployed also include substantial numbers who are disqualified from Jobseeker’s Allowance. Men and women who have been pushed into premature early retirement are another important group.
The new report provides an alternative set of unemployment figures for every district in Britain. These show that hidden unemployment is especially widespread in the older industrial areas of the North, Scotland and Wales.
In Liverpool, Glasgow, Middlesbrough and several of the Welsh Valleys the real rate of unemployment is estimated to exceed 20%. This compares to real rates of unemployment below 3% in parts of southern England.
The research also shows that although the official unemployment figures have fallen by more than 800,000 since 1997, hidden unemployment has increased by around 200,000.
The study was led by Prof Steve Fothergill of Sheffield Hallam’s Centre for Regional Economic and Social Research (CRESR). He commented:
‘Our report challenges the myth that full employment is just around the corner. The official unemployment figures give only a partial view of the labour market and they serve to mislead economic commentators and policy makers.’
‘Labour ministers have often acknowledged that too many people have become parked on benefits like Incapacity Benefit. What they have failed to recognise is the extent to which this hides the real level of unemployment.’
‘What ministers should also recognise is that although some parts of the South do now have very low rates of unemployment, much of the rest of the country is still a long way behind.’