Michael Saunders, a BoE policymaker, also suggested in a recent speech that a big rise in waiting times for non-emergency medical care due to pandemic backlogs could have made more Britons too sick to work.ĭirectly comparable data for other countries is hard to find. How much of the increase in long-term sickness is directly due to COVID is hard to pin down.Īround 1.8 million Britons reported in early April that they had COVID symptoms lasting more than a month, with some 346,000 saying they were so bad that they "limited a lot" their day-to-day activities, possibly a reason for those of working age to drop out of the labour market.
"The persistence and scale of this drop has been a surprise to us," BoE Governor Andrew Bailey told lawmakers earlier this month as he sought to explain why inflation is forecast to be stickier in Britain than elsewhere. The decline in Britain's workforce is also the longest since the early 1990s, when a recession caused unemployment to soar and some people gave up looking for work. Inactivity among the working-age population has increased in Britain by a higher margin than any of its peers. According to OECD data, across the Group of Seven countries only Italy has seen a bigger percentage drop in the share of those aged 15-64 active in its workforce. The number of people employed or looking for work in Britain was 34.2 million in the fourth quarter of 2019, but by the first quarter of this year it had fallen to 33.8 million.īritain stands out here. And with the pool of European Union workers no longer readily available after Brexit, labour shortages risk trapping Britain in a stagflation rut.īefore the pandemic, Britain enjoyed steady labour force growth and high rates of participation. The Bank of England is not sure any of these factors will turn around soon.
Instead, Britain has seen a sharp rise in people reporting long-term sickness - potentially due to the after-effects of high rates of COVID - as well as an exodus of older workers and more full-time study by the young. People have dropped out of the workforce not for want of jobs: the number of job vacancies advertised exceeded the number of those looking for work for the first time on record this year and the unemployment rate is the lowest since the 1970s.