MNI INTERVIEW: UK's Inactive Population Steadies At High Level

A jump in the number of people in the UK seeking to return to paid employment at a time when inflation surged seems to have run its course, with the economically inactive population stabilising at a high level with many suffering from long-term health problems, Darren Morgan, Director of Economic Statistics Production and Analysis at the Office for National Statistics, told MNI.

The Bank of England is closely monitoring developments in the labour market, with the UK lagging most advanced economies in getting people back to work following Covid. While 280,000 more people are now economically inactive than prior to the pandemic, inactivity started to edge down from July last year when inflation hit hardest, in a trend which continued until mainly the long-term sick remain on the sidelines today, he said.

"If you look at the latest labor market numbers ... those inactive because of long term sickness stabilised for the first time after some recent rises," Morgan said, adding “that's one to watch now for long-term sickness, have we peaked or not?”

Among the economically inactive, the number of long-term sick is 412,000 higher than prior to the pandemic, while the number of students has risen by 69,000 and the “other” category has added 64,000. On the other side of the ledger the number of those inactive because they are looking after family or home has fallen by 217,000 and the retired population has dropped by 45,000.

SICKNESS DOMINANT

Long-term sickness has been a more significant factor in changes in inactivity than the well-publicised narrative of a rise in early retirements, Morgan said, adding that detailed ONS analysis has highlighted how many of those who are unwell have multiple conditions, with mental illness commonplace.

It is uncertain both how many of these people will return to health and what proportion might attempt to return to work if they remain ill, Morgan said, though he noted that even a sharp decline in waiting lists for National Health Service treatment would be unlikely to have effect on the number of long-term sick. (MNI INTERVIEW: UK Participation Rate Fall Sticky - OBR Miles)

TRANSITION

Untangling the causes of economic inactivity overall is challenging, said Morgan's ONS colleague Matthew Lelii, pointing to how substantial numbers from this category had transitioned from being unemployed but looking for work.

"I imagine the older people have kind of different factors, which mean that they're more likely to be inactive for multiple reasons. For example, retirement and being sick. Middle-aged people typically may have other kinds of responsibilities of looking after children, as well as being sick. And then younger people as well could be students or anything else. So it is quite complex. And could well be a play as well for people that kind of just transition as their main reason," he said.

But it is clear that the number of people reporting long-term sickness has risen.

“There just is more self-reported ill health in the population and therefore it makes sense that things like inactivity due to long term sickness is also increasing. The question is I suppose with regards to the stickiness of it, is will these long term trends within the whole population continue?” Lelii said.

While a higher cost-of-living seems to have pushed some back into the workforce, the prospect of higher wages seems relatively ineffective as a lure.

"(In a survey last year) we went out to people over 50, who had left the workforce or were partially retired. When we asked them about what could tempt them back, it was more about flexible work and they were never going to come back full time. They wanted a flexible working pattern … Salaries always, too, but it wasn't ever the primary reason," Morgan said.