Who are “economically inactive” people, and could they join the work force?
20th Feb 2020
Following the government’s recent announcement to change immigration rules, Home Secretary Priti Patel suggested that any staff shortages resulting from lower immigration could be covered by people in the UK who are “economically inactive.”
On Radio 4 she said: “There are over 8 million people, that’s 20% of the workforce aged between 16 and 64 in the UK who are economically inactive.”
That’s not strictly true. There are 8 million people aged 16 to 64 who are economically inactive, but it’s not right to describe them as part of the “workforce.” They are of “working age”, but the work force, or more specifically the labour force, refers to the pool of people available for work. Economically inactive people don’t sit within this category.
But what actually is economic inactivity?
In the UK everyone over the age of 16 falls into one of three categories when it comes to their work status:
Employed people are those who do any paid work. This includes people who work full-time, part-time, self-employed people and people on irregular contracts (e.g. zero-hours contracts or seasonal workers).
Unemployed people aren’t in work but are looking for work, and are available to start working in the next two weeks.
Together, employed and unemployed people are classed as “economically active” and make up what’s called the “labour force”.
Economically inactive people are simply those who are neither employed nor unemployed; they’re not in paid work, but they’re also not looking for a job or available to start work. You might be economically inactive for a number of reasons, such as being retired, a student or too ill to work.
What are the main reasons for someone being economically inactive?
Firstly it’s important to draw a distinction between economically inactive people between 16 and 64 (working-age people) and those 65 or older.
We don’t have data on why the people aged 65 and over are economically inactive, but we can reasonably assume that most of them are retired.
When Ms Patel talked about economically inactive people, she was specifically referring to the roughly 8.5 million economically inactive people between the ages of 16 and 64. (In other words she wasn’t suggesting that staff shortages are filled by retrained pensioners.)
Working-age economically inactive people have various reasons for not looking for and/or being able to start work.
The biggest reason is that a lot of these people (27%) are students. 26% say they’re economically inactive because they’re too sick (most of whom have a long-term illness). 22% are looking after family or the home. And 13% have taken early retirement.
12% said there was some other reason for their economic inactivity.
The Office for National Statistics also collects data on whether people in economic inactivity want a job. 22% (roughly 1.9 million people) said they do want a job.
But on the question of how many of these people actually could move into the labour force, as Ms Patel suggests, this is unclear.
For example, a small number (around 30,000) are what’s called “discouraged workers”. They are not trying to find work because they believe there isn’t any available, and it’s possible that it would be relatively easy to convince these people to re-enter the labour force.
Whereas for other groups, like full-time students or carers, or those with illnesses, the practical barriers to work may be much higher, even if they do want a job. Whether it could be enough to make up for any shortfall in workers due to immigration changes (itself a figure we don’t yet know for sure) is far from certain.