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UNEMPLOYMENT DEALT WITH? NEXT STOP THE ECONOMICALLY INACTIVE

UNEMPLOYMENT DEALT WITH? NEXT STOP THE ECONOMICALLY INACTIVE. Saranna Fordyce Economy and Labour Market Division. In summary. Need to deal with the big stock of inactive men and women who are: - disabled with low qualifications - lone parents

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UNEMPLOYMENT DEALT WITH? NEXT STOP THE ECONOMICALLY INACTIVE

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  1. UNEMPLOYMENT DEALT WITH? NEXT STOP THE ECONOMICALLY INACTIVE Saranna Fordyce Economy and Labour Market Division

  2. In summary • Need to deal with the big stock of inactive men and women who are: - disabled with low qualifications - lone parents • Inactivity is a very different concept to unemployment • Those that don’t look for work don’t find work – and the vast majority that are on inactive benefits aren’t looking. DWP

  3. Plan of presentation: • What is inactivity? • Recent trends • Examining DWP PSA target groups • Reasons for inactivity • Focus on the low qualified disabled • The difference between unemployment and inactivity: by not seeking work inactives will not find work DWP

  4. A person is defined as inactive if they are out of work, and • Are not actively seeking work, and/or • Are unavailable to start work. Inactives may be on benefit, or for example people caring for children with working partners or students or are not on benefits DWP

  5. In Great Britain: • 26.8 million people are in employment • 1.5 million people are ILO unemployed • 7.7 million people are inactive - around 4 million of these are on inactive benefits • a fifth of the working age GB population are inactive Spring 2002 LFS, GB, working age DWP

  6. Inactivity rate fallen over the last 30 years, but it has stopped moving with the economic cycle Inactivity Rate (GB, LFS, working age), ILO Unemployment rate (UK, OECD, active population)

  7. Inactivity rate has been rising/flat for all male age groups over the last 10 years …Male inactivity rates (LFS, GB working age excluding those in FTE)

  8. The picture is more mixed for women, with younger age groups rising and older age groups fallingFemale inactivity rates (LFS, GB working age excluding those in FTE)

  9. The main reason given for inactivity is being sick or disabled for men and family/home for womenSpring 2002 LFS (WA, excluding those in full time education) 60% 50% 40% proportion of all inactive 30% 20% 10% 0% retired retired LT sick or disabled family/home not looked family/home LT sick or disabled other reason male female DWP

  10. For PSA target groups employment rates are generally up …Employment rate (LFS spring quarters, working age)

  11. … and unemployment is down …Unemployment rate (LFS spring quarters, working age)

  12. But mixed picture for inactivityInactivity rate (LFS spring quarters, working age)

  13. Fall in demand for low-skilled labour* • Trade story: Rise in productivity in unskilled labour intensive manufacturing in LDCs + reduction in trade barriers + increase in supply of unskilled labour as workers leave agriculture in LDCs and move into manufacturing at the expense of unskilled workers in developed countries. • Technology story: Technological progress is biased in favour of skilled workers. *Stephen Nickell, RES Conference, 8 April 2003. DWP

  14. Inactivity rate of the disabled without qualifications is very high and increasing… Inactivity rate for disabled (LFS spring quarters, working age) DWP

  15. …but this is not a result of compositional changes Breakdown of the working age population,excluding those in FTE, GB, LFS winter quarters DWP

  16. Inactive population levels by disability and qualification(LFS winter quarters, excluding those in FTE, GB, LFS, working age) 1.2m 1.6m 0.8m 2.3m DWP

  17. Correlation between areas of high unemployment receipt and high inactive benefit receiptBenefits admin data, August 2002 30 2 R = 0.5787 25 20 % claiming inactive benefits 15 10 5 0 0 1 2 3 4 5 6 7 % claiming unemployment benefit DWP

  18. But there is no correlation between changes over timeBenefits Admin data, change between August 2002 and August 1997 3 2 R = 0.0203 2 1 0 -6 -5 -4 -3 -2 -1 0 1 2 change in % on inactive benefits -1 -2 -3 -4 change in % on unemployment benefits DWP

  19. 2 R = 0.027 And there is no correlation between inactivity and the jobs ratio (local jobs/local population) Local Authority Districts 45 40 35 30 25 Inactivity rate (%), 2001 20 15 10 5 0 20 30 40 50 60 70 80 90 100 110 120 130 140 Jobs ratio, 2000 DWP

  20. People who have been inactive for longer periods of time tend to be on sickness and disability benefits Key benefits by duration of claim (administrative data, August 2002) thousands DWP

  21. The majority of claimants of inactive benefits are inactive so most will not be seeking work. Economic status by client group, proportions, LFS, spring 2002 DWP

  22. People not seeking work are unlikely to find workFlows from inactivity in one quarter into employment in the next quarter (excluding those moving from education and those entering retirement, longitudinal LFS) DWP

  23. And very few of those that are inactive are seeking work …(% out of work by economic status, LFS) DWP

  24. In summary • Need to deal with the big stock of inactive men and women who are: - disabled with low qualifications - looking after the family and home • Inactivity is a very different concept to unemployment • Those that don’t look for work don’t find work – and the vast majority that are on inactive benefits aren’t looking. DWP

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