Switch to sickness benefit masks unemployment rate

Britain's apparently low unemployment rate is being understated due to huge numbers of unemployed people claiming sickness benefit instead of unemployment benefit, a new study suggests.

As much as 7% of Britain's working age population is now economically inactive due to long term sickness, compared to 2.1% in Germany and 0.3% in France.

David Webster, an independent researcher, told the British Association for the Advancement of Science's annual science festival in Glasgow yesterday that he believed the sickness claimants were disabled but were in many cases able and keen to work.

"The evidence suggests that most of these people are really unemployed," he said. "They have moved on to sickness benefits - to which they are entitled - in response to reductions in unemployment benefits which have been made in an attempt to increase the financial incentive to work."

There have been frequent claims that the government's measure of unemployment, which counts the number of people claiming unemployment benefit, is misleading and that it would be more accurate to use the International Labour Organisation's measure. This would increase the count from fewer than 1m unemployed (3.2%) to 1.45m (4.9%).

But Mr Webster, a former labour economist at the London School of Economics who is now Glasgow council's chief housing officer, said that even the ILO measure significantly understated the true level of unemployment.

"If all the adjustments were made, the [ILO] figure would probably double," said Mr Webster.

Further evidence of peculiarities in the official figures come from comparisons of the pan-European Labour Force Surveys (LFS), a kind of mini-census carried out each year.

In France, 91% of people who are not working, but who tell LFS interviewers that they want to work, are counted as unemployed according to the ILO measure. But in Britain, only 44% are counted.

The real difference in sickness rates between the two countries was unlikely to be so extreme, he argued. The reality had to be that in both countries there were hundreds of thousands of people of working age who were both unable to find a job, and ill or disabled to an extent which meant there were jobs they could do.

If true, the government would be in a bind: if it clamped down on sickness benefit, on the grounds that not all claimants were genuine, it would risk lengthening the dole queue figures and jeopardising its most cherished achievement.

Mr Webster said it was likely that the low level of unemployment benefit in Britain did worsen the health of claimants, making them more likely to move to sickness benefit.