Economic inactivity rises again

Economic inactivity rates are up on the quarter, with over 50s and younger workers more likely to drop up, according to new figures from the Office for National Statistics.

Unemployment was also up on the quarter, on the year and on the pre-pandemic period, standing at 4.3%. The UK economic inactivity rate for people aged 16 to 64 years was estimated at 22.1% in January to March 2024, above estimates of a year ago, and increased in the latest quarter.

Increases in economic inactivity over the latest quarter were largely among those aged 50 to 64 years and those aged 16 to 24 years. The main drivers were temporary sickness, long-term sickness or retirement. The annual increase was largely because of students and those who were long-term sick.

Pay was also up. In real terms (adjusted for inflation), regular real pay was up 2% and total real pay was up 1.7% in January to March 2024.

The Institute for Employment Studies said its analysis shows that the growth in ill health “is being driven primarily by fewer people with health conditions coming back to work rather than more people leaving” and that talk of a ‘sicknote culture’ – Prime Minister Rishi Sunak’s justification for a benefits crackdown – is not accurate.

Tony Wilson, Director at the Institute for Employment Studies said: “Today’s jobs data is very disappointing again. The UK remains pretty much the only country in the developed world where employment is stuck below pre-pandemic rates, with our continued weak performance almost entirely explained by more people outside the labour force entirely, or ‘economically inactive’. Overall, there are now 900,000 more people out of work than before the pandemic began, with virtually all of this due to higher economic inactivity.

He added: “There appear to be three key reasons for this: fewer older people coming back to work, more young people in education or out of work, and more people off with long-term health conditions across all ages. However, for all the talk about this being driven by a ‘sicknote culture’, the reality is that the UK has among the lowest rates of sickness absence in the world, while our analysis shows that the growth in ill health is being driven primarily by fewer people with health conditions coming back to work rather than more people leaving. So we need to do far more and better to make our employment services more accessible, inclusive and supportive, rather than just threatening to change the rules or cut people’s benefits.”

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