A slowing jobs market risks leaving young and disabled people behind

Young people are being hit hardest. Youth unemployment has climbed to 14 per cent, also a five-year high. That should set alarm bells ringing. Early experiences of joblessness can leave lasting scars: lower lifetime earnings, weaker job security and poorer health outcomes. If we allow a generation to drift into long-term worklessness, the economic and social costs will be felt for decades.

Disabled people are also facing mounting challenges. The unemployment rate for disabled people now stands at 9.2 per cent - more than double the rate for non-disabled people (4.4 per cent) and the highest level in over six years. This risks reversing the hard-won progress in narrowing the disability employment gap over the last decade.

Part of the overall rise in unemployment reflects more people beginning to look for work after a period of economic inactivity. That is welcome in principle, but it raises a crucial question: are there enough secure and flexible jobs available for those stepping back into the labour market?

Vacancies have fallen sharply from their post-pandemic peak and now stand at 726,000. This means there are currently 2.6 jobseekers for every vacancy. This growing mismatch increases the risk of long-term unemployment taking root. Already, a quarter of unemployed people have been out of work for more than 12 months and this proportion has been rising for three years.

Ministers are right to focus on their ambition to “Get Britain Working”. Additional funding for employment support and the expansion of local schemes are positive steps. But there is a danger that reforms remain too small-scale and take too long to deliver to stem the tide. If long-term unemployment rises significantly, it will be much harder - and far more expensive - to bring down.

A weakening labour market also carries wider risks. Rising joblessness will add pressure to the public finances. And if the burden falls disproportionately on young and disabled people, it also risks deepening inequalities between communities and regions.

The response must be bold and sustained. Tailored employment support should be expanded quickly, with funding brought forward to rapidly scale up local trailblazer projects where evidence suggests new approaches are working. It should also be linked more explicitly to the growth sectors identified for investment in the Government’s Industrial Strategy - from green industries to digital and advanced manufacturing - particularly in areas that most need economic renewal.

Crucially, the goal cannot simply be to move people off unemployment benefits and into any job. Work must be secure, fairly paid and flexible. Evidence shows insecure and low-paid employment can be just as damaging to mental and physical health as unemployment itself.

Strengthening the labour market for the long-term means creating genuine pathways into sustainable work with opportunities for progression. Without that, today’s rise in unemployment risks becoming tomorrow’s long-term crisis.

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Ben Harrison is Director of the Work Foundation at Lancaster University

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