Unemployment figures don't reflect millions of jobless Britons

The Organisation for Economic Co-operation and Development and Centre for Cities released a study indicating that there could be “hidden” numbers in official unemployment data.

The Paris-based institution, which is often described as the rich-world's economic watchdog, suggested that the UK jobless rate could be almost three times higher.

There are large levels of “hidden” unemployment in towns and cities across Britain that are excluded from the official government statistics, the study, which was released on Thursday, revealed.

The study showed that more than 3.0m people are missing from the headline unemployment rate. These people do no register because they report themselves as economically inactive to government labour force surveys, saying that they believe no jobs are available.

It said the true unemployment rate should be 13.2% of the working-age population not in education and not 4.6%. This means that the official level of jobless would rise from 1.3m to 4.5m.

The Centre for Cities said that urban locations faced the highest levels of hidden joblessness. Cities such as Liverpool had the highest rate in the country, with one in five working age adults find themselves unemployed.

Other heavily affected cities included Sunderland, Dundee, Blackburn and Birmingham.

Andrew Carter, chief executive of the Centre for Cities, said: “It is possible that the unemployment rate in Britain’s cities is far higher than official figures suggest.

"This research suggests that people in cities which have struggled to recover from the deindustrialisation of the 20th century could be dealt a second blow as they are ill-equipped to respond to automation.”

Alternative research from the Institute of Fiscal Studies also showed that unemployement is hitting Britons in their 30s and under harder than those born earlier.

The study shows that progress of improvement in living standards and falling rates of home ownership has stagnated.

"For decades there has been an assumption that each generation will enjoy higher living standards than the one before them. That’s the case for people now in their early 40s, whose incomes are double those of people born in the 1930s at the same age. But for millennials the rule no longer applies," read the report.

This is the first time progress has stalled since World War II and it partly reflects the damaging effect of the 2007 financial crisis on average incomes and living standards.

House prices have surged recently and young people at age 30 who want to buy a home are finding it harder. Home ownership at that age has fallen from 60& for those born in the 1960s to 40% to those 20 years younger, said the IFS.