UK Experiences a Wave of Economic Inactivity Amidst Rising Cost of Living
The UK is experiencing a wave of people entering or returning to the workforce due to the rising cost of living. According to the Office for National Statistics, there was a record number of people moving out of “economic inactivity” between July and December, as more got jobs. This could be reflective of the “great unretirement”, experts suggested.
Darren Morgan of the ONS said: “The last quarter of 2022 saw fewer people remaining outside the labour market altogether, with some moving straight back into a job and others starting to seek work again. This meant that although employment rose again, unemployment also edged up.”
A report by the consultancy LCP finds that the sharp rise in economic inactivity is more likely to be driven by people waiting for treatment as the health service struggles to cope, as well as by people who permanently live in poorer health. The report also noted that early retirement ‘explains none of the increase in inactivity since the start of the pandemic', and that almost half (45%) of the 630,000 economically inactive are aged under 50.
The data also showed that regular pay growth was 6.7 percent in the three months, the strongest growth rate seen outside the pandemic. But wages continued to be outstripped by rising prices, as after taking inflation into account, regular pay fell by 2.5%. Moreover, the ONS said that 843,000 working days were lost to strike action in December, which was the highest number since November 2011.
Rishi Sunak’s government is “barking up the wrong tree” by trying to get people in retirement back to work to fix chronic staff shortages, according to the report. It warns that long-term sickness and pressure on the NHS is having a bigger impact on the jobs market. People are realising their pensions may not go as far as they had expected, but they may also be encouraged to reconsider a return to work due to better health.
0. “More people moving into the workforce – Financial News” FinancialNews.co.uk, 15 Feb. 2023, https://financial-news.co.uk/more-people-moving-into-the-workforce
1. “‘Great unretirement' driving over-50s back into work amid soaring living costs” NewsChain, 14 Feb. 2023, https://www.newschainonline.com/news/financial-news/great-unretirement-driving-over-50s-back-into-work-amid-soaring-living-costs-320358
2. “Record Number of Britons Seeking Jobs as ‘Economic Inactivity' Drops Amid Rising Cost of Living” The Epoch Times, 14 Feb. 2023, https://www.theepochtimes.com/record-number-of-britons-seeking-jobs-as-economic-inactivity-drops-amid-rising-cost-of-living_5056546.html
3. “Sickness is the real reason over-50s give up work, Hunt told” The Times, 20 Feb. 2023, https://www.thetimes.co.uk/article/hunt-barking-up-wrong-tree-with-call-for-over-50s-to-return-to-work-dvck60tcr
4. “Are we really seeing a ‘great resignation'?” The Spectator, 20 Feb. 2023, https://www.spectator.co.uk/article/are-we-really-seeing-a-great-resignation/
5. “More 16-24-year-olds get jobs as living costs bite” BBC, 14 Feb. 2023, https://www.bbc.com/news/business-64629438
6. “UK ‘barking up wrong tree’ trying to get over-50s back to work, report finds” The Guardian, 20 Feb. 2023, https://www.theguardian.com/business/2023/feb/20/over-50s-back-to-work-uk-lcp-report
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