Half a million people have left the labor market, and no one really knows why
The number of people who have dropped out of the labor market since 2019 citing long-term illness or mental health issues has risen by half a million, according to data from the Office for National Statistics (ONS).
The increase in long-term illnesses began in 2019, before rising sharply by 363,000 between the start of 2020 and the three months to the end of August 2022 to reach 2.5 million, he said.
Long-term illness was the reason given by 28% of people who had neither worked nor looked for work between June and August 2022, compared to 25% at the start of the pandemic.
According to data from the ONS Long Covid in the UK, around 0.8% of those who were economically inactive in the four weeks to September 3, 2022 also reported Long Covid limiting them. The ONS said this equated to around 75,000 people.
The most common and fastest growing category of poor health was ‘other health conditions or disabilities’ – although the ONS questioned whether the increase was mainly due to the long Covid, as the strongest increase occurred in 2019.
Most people who now cite long-term illness as a reason for not working or looking for a job initially dropped out of the labor market for another reason, the survey found.
The ONS said waiting times in the NHS, the long-term impact of Covid and an aging workforce are potential factors fueling the high level of drop-outs from the workforce.
“There is a need to better understand the impacts of National Health Service wait times, the long duration of Covid and an aging workforce,” the ONS said.
While the causes may be a current mystery, its impact is less so. Bank of England chief economist Huw Pill told a House of Lords committee last week that a sharp drop in the size of Britain’s workforce was keeping upward pressure on on inflation and pointed to further interest rate hikes.
This increase in economic inactivity means that the labor force has shrunk, with more people out of work than before the pandemic, even though unemployment is at an all-time high. The UK has already had one of the highest employment rates in the OECD.
Sectors such as retail and hospitality, which have less flexibility when it comes to working from home, are seeing higher levels of worker dropouts due to illness.
The survey also found that the number of economically inactive people who reported back or neck-related problems or disabilities increased by 62,000 (31%) – the second largest increase after ‘other conditions’.
The report suggests that the increase in working from home since the pandemic has given rise to this type of chronic illness.
Adults over the age of 50 have been the main driver of the rise in economic inactivity for all reasons, but the report says the biggest relative increase is among people aged 25 to 34.
People aged 25 to 34 accounted for 11% of people inactive due to long-term illness in 2019, but 14% over the same period in 2022, an increase of 97,000.
The Institute for Employment Studies (IES) think tank said rising economic inactivity continues to be driven in particular by fewer older people in work – who make up three-quarters of the total increase – and by more people out of work due to long-term health problems. , which again saw a record quarterly increase and reached its highest level in at least 30 years (at 2.49 million).
The number of people quitting work to care for family is also rising after three decades of falls, which may well reflect more parents (and single parents in particular) struggling to find or keep jobs. ; while the number of students is increasing again, and the number of people citing early retirement has also increased slightly. So overall, the workforce is contracting in different ways and is now half a million less than it was before the pandemic.
He warns the figures are “worrying”, describing them as “an inauspicious backdrop against which to search for tens of billions of pounds in public spending cuts”.
The IES said Chancellor Jeremy Hunt should have four key priorities for his statement later this month – extending the Restart Programme, which is expected to underspend by around £1.2billion; do much more to improve access to specialist health and work support; ensure decent pay settlements and public sector reform, and increase investment in skills and training, especially for the unemployed.
It warns that employers need to better understand their workforce and local labor markets, broadening and simplifying recruitment, making work more flexible and secure and improving access to training and support At work.