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Falling employment and worsening well being within the UK: related or distinct tendencies?

  1. Jonathan Cribb, affiliate director

  1. Institute for Fiscal Research, London

Growing financial inactivity and worsening well being are regarding tendencies, however they seem like distinct points, writes Jonathan Cribb

Two regarding financial and social tendencies within the UK rising from the covid-19 pandemic are the autumn in employment of individuals aged 50 and over and the rise in illness ranges within the inhabitants. The drop in employment has not been attributable to rising unemployment (when individuals are typically looking for work), however reasonably by rising “financial inactivity” (after they typically should not).1 These declines haven’t occurred in most industrialised nations with a notable exception of the US.23 A pure conclusion may be that the 2 tendencies are associated. However a better take a look at the information implies that—in 2020-21 a minimum of—these points have been fairly distinct.

In Autumn 2022, virtually 27% of individuals aged 50-64 had been economically inactive in contrast with lower than 25% simply earlier than the pandemic. This may not sound like a lot, however it’s placing contemplating the close to steady declines in inactivity seen on this age group for the reason that early 2000s.4 This decline has been partly pushed by of the rise in state pension age for ladies (and extra just lately males).5

On the similar time, the proportion of individuals aged 50-64 who say they’re out of the labour power owing to unwell well being is rising considerably.4 Different metrics additionally level to rising poor well being. The proportion of the inhabitants saying that they’ve a well being situation that limits their each day exercise has been rising since 2017 and has risen sharply since early 2019.6 The variety of individuals making use of for and receiving incapacity advantages has jumped.6 So too has the variety of individuals on NHS ready lists.7 All these tendencies are regarding. However, a minimum of thus far, they don’t appear to have pushed an uptick in financial inactivity.

As an alternative, there appear to be two distinct points.48 First, individuals of their 50s and 60s have more and more moved out of paid work and into retirement. The truth that the era presently at or approaching state pension age have extra wealth than any era earlier than them and excessive charges of homeownership is more likely to have facilitated this.910 Second, worsening well being—on quite a lot of metrics—implies that extra individuals of those ages at the moment are reporting themselves as being out of labor for well being causes. However three quarters of the rise in well being associated inactivity is amongst individuals who had already been out of labor for a minimum of 5 years (as a result of, for instance, they had been unemployed, taking care of household, and even retired). Which means that typically the will increase in long run illness haven’t been driving up financial inactivity for the reason that pandemic.1

To what extent might this story, of two distinct tendencies, change within the coming months and years? It’ll probably evolve, bringing the problems nearer collectively. A number of the rises in financial inactivity occurred virtually instantly when the pandemic struck. Different individuals misplaced their jobs when the furlough scheme was made much less beneficiant and by no means seemed for an additional one. There have been different massive spikes in retirement as we emerged from the pandemic and the furlough scheme was ended utterly.

Worsening well being in individuals of their 50s and 60s is understood to be one of many key causes for falling employment charges as individuals age.11 Unhealthier individuals may depart work earlier, and are unlikely to return to work, pushing inactivity charges up additional (although different components may act to restrict such an increase).

Both means, for a authorities desirous to sort out rising financial inactivity, which depresses tax revenues and worsens labour shortages, there are unlikely to be simple levers to drag. Encouraging retired individuals or these out of labor for well being causes again into work, notably full time work, is notoriously troublesome. However the price of residing disaster might encourage a few of these farther from pension age again to work in the event that they discover their way of life sufficiently eroded. A long term fear for coverage makers is that these tendencies will battle with the federal government’s want to increase working lives as a response to demographic and ageing pressures on the general public funds.


  • Battle of curiosity assertion: JC is an affiliate director on the Institute for Fiscal Research. This text attracts on analysis at IFS funded by the Financial and Social Analysis Council. He has obtained analysis grants for analysis on this space lately from the Centre for Ageing Higher, Nuffield Basis, and the Joseph Rowtree Basis. In every case, analysis was circulated to the funders for feedback earlier than wider circulation. Nonetheless, final editorial management was retained by the authors.

  • Provenance and peer evaluation: Commissioned; not externally peer reviewed.



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