The Office for National Statistics (ONS) reported in November 2022 that there has been an increase in the number of economically inactive people in the UK. The figures show that between June and August 2022, there has been an increase of half a million people who are economically inactive – 2.5 million up from 2 million in 2019.
The ONS defines people who are economically inactive as working-age adults who are not in the labour market. In the UK, individuals over 16 fall into one of three categories; employed, unemployed or economically inactive. A definition by Full Fact describes economically inactive individuals as people who are not employed nor unemployed – not currently in paid work but also not seeking work. These individuals may become economically inactive for various reasons, such as being in retirement, studying or illness.
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Economic Inactivity in the UK
The ONS report states that it is surprising to see a consistent drop in the workforce, especially since there was a record increase in labour demand with the re-opening of the economy since pandemic restrictions have been lifted.
It also shows that the pandemic has especially affected workers over the age of 65 years old, with data showing that men over 65 were seven times more likely to be inactive compared to men between 20 and 24 years old – with numbers before the pandemic showing they were only five times more likely. The numbers for women of the same age group have risen to eight times more likely than pre-pandemic numbers.
It is shown in the ONS report that the number of people who are not working due to sickness has increased by 363,000 – which now accounts for 28% of those not in the labour market between June to August 2022. Being a student is the second most reported reason for economic inactivity, amounting to 26.8% of economically inactive people.
Is This a Legacy of the Pandemic?
Economic inactivity has been a concern for the UK government since numbers have changed due to the pandemic. However, an insight report by the UK Parliament showed more optimistic tones.
The insight report noted that the Bank of England in November 2021 expected the economic inactivity due caused by the pandemic will be temporary – but also mentioned that the pandemic has the potential to speed up the long-term trend of economic inactivity due to an ageing population.
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Now in 2022, numbers have shown that older age groups are less likely to be economically active – some driven by the effects of the pandemic. This shows that the pandemic has accelerated some trends of economic inactivity in the UK. Employers should note this as workers aged 50 and over are still a big part of the UK labour market. It is recommended that employers should take action to ensure that there is no age discrimination in the workplace that can further economic inactivity within this age group.
Although the pandemic has brought significant transformations in the UK labour market, it should be noted that some reasons behind economic inactivity can be prevented. Employers should take note of how this will affect employment and recruitment.