Huge government handouts during the pandemic have left many workers reluctant to go back to their jobs, a report by a global club of central bankers has found.
The Bank of International Settlements (BIS) said the labour force ‘participation rate’ in some countries, including the UK, had yet to recover to pre-Covid levels.
On top of that, it said ‘workers’ preferences have shifted in favour of fewer working hours’.
While the struggle to get employees back to work was partly for health reasons, the report also found that ‘participation has been recovering more slowly where pandemic-related fiscal uphold was larger’.
A fall in the number of those available to work could also be caused by the population ageing, it added.
Slacking off: The Bank of International Settlements said the labour force ‘participation rate’ in some countries, including the UK, had yet to recover to pre-Covid levels
In the UK, latest official figures show that the economic inactivity rate – covering those neither in work nor seeking employment – remains higher than pre-Covid levels.
The report from BIS – which is owned by member central banks – implies that the generosity of Britain’s £70billion furlough scheme during the pandemic could be partly to blame.
Between March 2020 and September 2021 the taxpayer-funded scheme paid those temporarily laid-off due to lockdowns up to 80 per cent of their wages.
A total of 11.7m jobs were furloughed. Now, ministers are seeking to bring many back into the workforce, with the number of vacancies in the economy standing at nearly 1m.
Chancellor Jeremy Hunt acknowledged the problem – which the Government is trying to tackle through benefit reforms – during a think-tank event yesterday.
He compared the UK’s participation rate unfavourably with the Netherlands.
‘If we had the same number of women in work as they have in Holland, relative to the size of population, we would have two million more people in work in the UK so we would have filled every vacancy in the economy twice over,’ he said.
