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TO THE POINT
160407 Economic inactivity
  • Talkin’ inactivity. We talk about the employed. We talk about the unemployed. But what about those who are neither? The economically inactive are people who are outside the labour market because, say, they’re students or have retired early. Or, to give them their technical definition, they “have not been seeking work within the last four weeks and or/or are unable to start work within the next 2 weeks”. The above chart shows the economically inactive population as a proportion of all 16-64 year-olds.
  • The persistence of the overall rate… The overall inactivity rate is remarkably persistent. It has stayed within 1.2 percentage points of 23 per cent, either above or below, for the past 23 years. But it does still appear to be on a downwards trend. The current rate of 21.8 per cent is the lowest recorded during that time, and is 1.8 percentage points lower than it was at the start of 2010.
  • …and the fluctuations beneath it. There are more fluctuations when it comes to people’s reasons for economic inactivity, which are shown in the chart. Back in 1993, 8.3 per cent of the working age population was classed as looking after their family or home, whilst 4.0 per cent were classed as students. Now those proportions are equal at 5.5 per cent each.
  • Ready for retirement? The most dramatic changes have been amongst those retiring early. There are more doing so now, in terms of headcount, than there were twenty years ago – 1,166,331 compared to 1,120,520, or an increase of 45,812 – but this might not be true for much longer. Their numbers have declined by 25.9 per cent over the past five years. They have gone from making up 3.9 per cent of the working age population to 2.9 per cent. A life on the links is being held off.
  • From inactive to active. I said above that the economically inactive are people outside of the labour market. It’s actually a bit more complicated than that. Some people exist on the threshold, choosing whether to be inside or outside, inactive or not. Those approaching retirement age are among them. They appear to be choosing a later retirement, and some may even be coming out of retirement to enter work. The employment figures are a beneficiary of these decisions.

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