More than 300,000 adults in the West Midlands are involuntarily out of work and should be classified in unemployment records, according to a report.

Cities Outlook – a report on the annual economic health of the UK’s largest urban areas – by thinktank Centre for Cities’, notes the region’s unemployment rate does not include more than 300,800 people who are involuntarily out of work but classed as economically inactive.

While official figures currently show the region’s jobseeker rate at 5.1 per cent, the actual ‘hidden’ unemployment rate is nearly three times higher at 14.3 per cent.

Birmingham has the highest hidden unemployment rate in the West Midlands at 16.6 per cent.

Official government statistics only include those who are actively looking for jobs, the thinktank reports, and does not measure people who are neither in work nor looking for a job due to circumstances outside of their control.

Those circumstances include people who are long-term sick or those who are discouraged from looking for a job, or believe there are ‘no good jobs’ available in their area. Hidden unemployment is calculated by adding involuntary inactivity to official unemployment figures.

A rise in long-term ill health has significantly reduced the size of the UK’s potential workforce across all ages since the pandemic. It is a particularly large driver of workers classified as economically inactive in their 50s and 60s.

In total, 27.6 per cent of this age group were now inactive; an increase of 2.4 percentage points since before the pandemic.

This is more than the 1.5 percentage point rise in the working age population as a whole, according to an analysis of Office for National Statistics figures by Rest Less a digital community and advocate for over fifties.

Jeremy Hunt, the chancellor, promised a “fundamental programme of reforms” to get millions of people back to work in a keynote speech last week.

But Cities Outlook claims attempting to get people back into work would not be enough to resolve the UK’s inactivity crisis. The bigger challenge many urban areas face – including the West Midlands – is in fact a long-term jobs shortage, rather than a short-term lack of workers.

“If policy is to tackle the UK’s true inactivity problem, then it will need to address the shortage of jobs in struggling cities and large towns. The government should therefore swiftly set out a levelling up agenda that tackles the reasons for why there is a lack of jobs and skills in urban areas outside the Greater South East,” the report notes.

The solution noted by Cities Outlook – job creation and investment in public services – comes after many towns in the West Midlands received no levelling up funds.

Birmingham – as well as Wolverhampton, Dudley, and Coventry – received no money from round two of the government’s flagship levelling up fund.

Eight projects in towns such as Sandwell, Bromsgrove, and Shrewsbury, received £155 million from the government’s £4.8 billion levelling up fund. The funding round has prompted questions around the fairness of the allocations.