Report highlights growing regional gaps on economic inactivity

Different parts of the country have been more affected by economic inactivity as a result of health issues in the wake of the pandemic, with areas like West Wales being particularly badly hit and disability rather than age being a salient factor, according to a report by the Resolution Foundation.

The Foundation’s latest Labour Market Outlook shows that the areas with the biggest rises in long-term sickness are those where levels of ill-health were already high. Places like West Wales and Merseyside have seen levels of inactivity due to ill-health rise twice as fast as the national average. As a result, says the Foundation, long-term sickness gaps across Britain are widening.

The research finds that the worst affected areas tend to have particularly high shares of people with a disability, and a low share of graduates. The share of older workers in a local area, which was originally considered to be a key driver of rising economic inactivity, is not associated with rising long-term sickness. In particular, the report notes that areas like Lancashire and North West London have seen both big rises in long-term sickness and falls in employment – creating huge challenges for their local labour markets.

Some areas like the Tees Valley and Durham have experienced both rising employment and rising inactivity due to ill-health, showing rising ill-health and a tight labour market can co-exist in the same local areas.

When it comes to employment generally, the report shows that, while overall employment levels still haven’t yet returned to pre-pandemic levels, with the UK being the only G7 economy not to have reached this milestone, many traditionally low employment areas of the country such as Tees Valley and Durham and West Central Scotland including Glasgow have experienced positive employment growth between March 2020 and September 2023. However, high employment areas such as Cheshire,  Surrey and Sussex have seen the biggest falls.

Charlie McCurdy, Economist at the Resolution Foundation, said: “While Britain’s employment gaps have continued to fall, its sickness gaps have widened. This has been driven by traditionally low employment areas like Tees Valley and Glasgow recording strong jobs growth, while areas like Merseyside that already had high levels of ill-health and disability experiencing the sharpest increase in long-term sickness.

“It’s vital that national, regional and local policy makers understand these regional differences as they face up to the challenges and opportunities of local labour markets up and down the country.”

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