You know what turned out to be rubbish? Mid-pandemic predictions of Covid-19’s legacy. Claps aside, the promised new dawn of better conditions for essential workers never arrived. Meanwhile, the extension of furlough meant the feared wave of unemployment never arrived. Instead, one legacy that no one saw coming has: a major rise in economic inactivity (those neither in nor looking for a job) of around half-a-million people.
Now, we shouldn’t forget the UK’s very respectable levels of labour market activity internationally, but understanding the drivers of this recent deterioration is important because its cause will tell us how worried to be about it. We know it’s concentrated among older workers and the Office for National Statistics (ONS) has argued that more retirements are the single biggest driver. In so far as this reflects older workers deciding they prefer not to work post-pandemic that’s something policymakers might be relaxed about.
But the ONS also observes that ill health is playing a role and a new note, co-authored by the Bank of England’s Jonathan Haskel, argues that the role of sickness in driving up inactivity is being underplayed. Why? Because the ONS focuses on people who report ill health as the primary reason for their inactivity. If you look instead at the increase in who reports being long-term sick, whether or not it’s their primary reason for being inactive, the authors argue it explains almost all (88%) of the rise in inactivity. This is about far more than long Covid, with long-term sickness rising well before the pandemic. And a sick Britain is something the next prime minister, and all of us, should be a long way from relaxed about.
Torsten Bell is chief executive of the Resolution Foundation. Read more at resolutionfoundation.org
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