Labour stats show growth of ill health fuelling economic inactivity

Long-term ill health has overtaken studying as the most common reason why people are not looking for work or being available for work as new figures show large numbers of older workers are economically inactive.

The Office for National Statistics has issued the latest labour market statistics which show employment, unemployment and economic inactivity are all virtually unchanged on last month’s figures, with just under 1.1 unemployed people per vacancy, the lowest figure for at least 50 years. This compares to more than four unemployment people per vacancy in mid-2020.

The ONS estimates for October to December 2021 show a small quarterly increase in the employment rate and a small decrease in the unemployment rate. However, economic inactivity has increased slightly on the quarter. The number of job vacancies in November 2021 to January 2022 rose to a new record of 1,298,400, an increase of 513,700 from its pre-coronavirus January to March 2020 level. However, the rate of growth in vacancies continued to slow down.

Growth in average total pay (including bonuses) was 4.3% and growth in regular pay (excluding bonuses) was 3.7% among employees in October to December 2021. In real terms (adjusted for inflation), total and regular pay fell on the year at negative 0.1% for total pay and negative 0.8% for regular pay.

According to the Institute for Employment Studies a key reason for the labour shortage problem is fewer older people in work.  It says economic inactivity among people aged over 50 has grown by 560,000 since the crisis began, now accounting for 80% of the total growth in inactivity. While economic inactivity is now flat or falling for all other age groups, it continues to rise for older people.

The IES says that the employment ‘gap’ for disabled people has also risen during the pandemic, with disabled people being two and half times more likely to be out of work than non-disabled people.

IES Director Tony Wilson said: “Labour shortages are now holding back our recovery and will make the living standards crisis worse.  At the Budget next month we need action to raise participation and tackle this recruitment crisis, particularly for older people and those further from work.”

Meanwhile, the IES notes that there is little evidence as yet for the so-called ‘Great Resignation’ in the UK. New data on labour market flows also published today shows that job-to-job moves reached record levels at the end of last year as record numbers of people changed job.  However, while ‘resignations’ remain high, they fell back slightly on the previous quarter.

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