Last week, I look at some of the political perils for the Conservatives of adopting too narrow a view of the problem of the economically inactive:
“It would be deeply unfortunate were the Government to validate this charge by embarking on a policy shift in which everyone is treated principally as an economic cog which is either spinning or not – or in the Prime Minister’s words, is viewed as part of “our labour force”, to the exclusion of all else.”
At the root of the issue is the extent to which two categories of people – the economically inactive and the potential labour force – are actually coterminous.
It is ultimately, to a very great extent, a political question. Whether or not a self-sufficient retiree or stay-at-home parent should be viewed as primarily a potential worker who isn’t working depends a lot (and says a lot) about one’s political values.
Even in a more straightforward case – someone who is too ill to work, say – the answer could vary depending on whether one thinks other policy interventions could get them workforce-ready.
(This was the gist of the pushback against Fraser Nelson’s original claims: people pointing out that many claiming out-of-work benefits are not obliged to look for work and why that might be – although of course, a statement of the system is not a defence of the system and it does not necessarily follow that because someone is not currently obliged to look for work that they ought not to be. Again, politics!)
But before we can start making these judgements, we do need a clearer idea of who we’re talking about. Simply taking headline benefit claim or inactivity rates, counting them as a potential part of the workforce, and then seeing what share of the overall workforce they make up, is not likely to be a recipe for good policy.
For example when it comes to people claiming out of work benefits Declan Gaffney, a labour markets analyst, looked at the dataset Nelson used and estimated that some 3.5 million of the 5.3 million claimants are not currently expected to seek work, for a variety of reasons including sickness, disability, being the sole carer of very small children, and so on.
It could be the case that somewhere in that figure are people who aren’t currently expected to work but should be expected to do so, and Nelson does ask the question (“Are we really saying there are 1.7 million people so sick that they are incapable of any work?”). But answering it would likely be both politically thorny and, perhaps more importantly, expensive.
What about the broader question of the economically inactive, defined by the Office for National Statistics as: “People not in employment who have not been seeking work within the last 4 weeks and/or are unable to start work within the next 2 weeks”?
The most recent data for the overall number of economically inactive people (measured in thousands) puts the total number at 8,945,000, or almost nine million. (This is for people aged 16-64, so excludes those past retirement age, of which there are almost 11 million). Of these, over 7.2 million are listed as “does not want a job”.
Of that, some 2.5 million people are out of the labour force because of long-term sickness, a 25 per cent increase between the spring of 2019 and the summer of 2022. Some of that will be people with permanent conditions, some of it will be people who are stuck on NHS waiting lists; the ONS says “further work is required” to tease out such details.
(Interestingly, it also reports that more than two thirds of people in this group were already economically inactive anyway.)
Just over another 200,000 people are inactive due to temporary sickness. Then you have over 2.3 million students, and almost 900,000 16 and 17-year-olds in full-time education. Another 1.7 million people are counted as “looking after family/home”.
What about older people leaving the labour market? Excluding the over-65s, there are 1.13 million economically inactive retirees.
(However, despite the UK’s ageing population, that overall number is considerably lower today than when it peaked at almost 1.6 million in 2010, although since 2019 there has been a two-point rise in the share of economically-inactive people aged 50-64.)
Could some of these people be drawn or driven back into the labour market? Certainly: over 1.7 million are listed as “wants a job”, which is a start.
Ministers could encourage on-the-job training over full-time education, invest in programmes to help the disabled and long-term sick access work, raise taxes on retirement income, or any manner of other things of varying difficulty and popularity.
But turning the complaint that “a quarter of our labour force is inactive” into a detailed programme of policies to bring those numbers down, not to mention deciding which need to come down and by how much, would be no small task.