Labor Force Participation & Employment Rates Lower in UK Than the US

Posted on December 14, 2011


The Office of National Statistics in the UK reported employment for its August-October period and here is a another country that has a lower labor force participation rate and employment to population ratio than the US. Recently I wrote a piece that I published exclusively at Seeking Alpha entitled “Has The Size Of The U.S. Labor Force Reached Its Peak?“, which noted that the size of US labor force hits its peak size in December 2009 while the working age population continues to grow at a lower but constant rate. 

Looking at the size of the labor force in the UK, which hit 31.76 million in June 2011, its far too early to suggest that it may have peaked being that the current size of its labor force at 31.74 million is only marginally lower.

From The Office of Statistics release:

  • The employment rate for those aged from 16 to 64 was 70.3 per cent, down 0.2 on the quarter. There were 29.11 million people in employment aged 16 and over, down 63,000 on the quarter. The unemployment rate was 8.3 per cent of the economically active population, up 0.4 on the quarter. There were 2.64 million unemployed people, up 128,000 on the quarter. The unemployment rate is the highest since 1996 and the number of unemployed people is the highest since 1994. The inactivity rate for those aged from 16 to 64 was 23.2 per cent, down 0.1 on the quarter. There were 9.33 million economically inactive people aged from 16 to 64, down 54,000 on the quarter.
  • Total pay (including bonuses) rose by 2.0 per cent on a year earlier, down 0.3 on the three months to September 2011(with both the private and public sectors showing lower pay growth). Regular pay (excluding bonuses) rose by 1.8 per cent on a year earlier, up 0.1 on the three months to September 2011.

Clearly, looking at the table below one can see that without high labor force participation rates and employment to population ratios  the rate of unemployment has little meaning.  We can also see that it possible for things to get worse in the US.

Comparison of US, UK and Japanese Labor Markets
  UK US  Japan
Unemployment Rate 8.3% 8.6% 4.4%
Labor Force Participation Rate 63.1% 64.0% 59.3%
Employment to Population Ratio 57.9% 58.5% 56.6%
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