More people are entering or returning to work as the cost of living continues to bite into household finances. The Office for National Statistics said a record number of people moved out of “economic inactivity”, which is defined as people not looking for work, between July and December, as more got jobs.
It was driven by people in the 16-24 age group, as well as 50-64-year-olds.
One analyst suggested a “great unretirement” trend had emerged, with older people returning to work.
The UK’s economic inactivity rate, the proportion of people aged between 16 and 64 who are not in work or seeking to be, had been falling in general since records started in 1971, but then it increased during the Covid pandemic. This increase was partly due to those aged 50 to 64 taking early retirement and illness, as well as inactivity among students.
But the trend has started to reverse in recent months. The ONS said the fall in economic inactivity during the latest three-month period was helped by more of those aged 16 to 24 either getting jobs or looking for work.
An increase in employment was also driven by part-time workers.
Darren Morgan of the ONS said that in the last three months of 2022 fewer people remained outside the labour market altogether, with some moving straight into jobs and others starting to seek work again. “This meant that although employment rose again, unemployment also edged up,” he added.
The trend is partly down to the rising cost of living, according to Helen Morrissey, head of pension analysis at Hargreaves Lansdown.
“The great unretirement helped drive a record number of people back to work in the year to October-December,” she said. “People are realising their pensions may not go as far as they had expected. However, we also know some of these people stopped work because of long-term sickness, so better health may have encouraged them to reconsider a return to work.”
However, she added that young people entering the workplace, many for the first time from education, also played a “major role” in the rate falling.
UK economic growth has flatlined in recent months and the Bank of England expects the UK to enter a recession this year. Many industries have struggled to recruit workers, though job vacancies are falling.
The government has been considering plans to coax retired middle-aged workers back into jobs to try to boost the economy, with reports older workers could be offered a “midlife MoT” to assess finances and opportunities for work.
Kate Shoesmith of the Recruitment and Employment Confederation said the Spring Budget was an opportunity for the government to provide extra support.
“Improving childcare support and provision to enable more parents to work and older workers such as grandparents to stay in work is vital, as is reinvigorating welfare to work schemes,” she said.