According to the BBC, about a quarter of the working-age population in Britain (about 10 million people) are currently unemployed. According to official statistics, about 1.3 million people were unemployed in Britain in December 2022: the unemployment rate was 3.7%, lower than any level since the 1970s.
But the unemployed account for only a small part of the 10 million unpaid working-age population (16-64 years old). Nearly 9 million of them cannot be called “unemployed” because they are not actively looking for jobs or are unable to start working. These people are called “economically inactive”. British politicians use a lot of words like sleeping late, being slow and being idle when discussing the problem of “economic inactivity”.
During the epidemic, the labor force in all major countries shrank. However, although most major economies have recovered since then, the inactivity rate in the UK has continued to rise, rising by 0.5 percentage points. The main reason why such people don’t work varies with age. According to ONS data, most of the 2.7 million “inactive” people under the age of 25 are students, and most of them don’t want to work. The situation in other age groups is different. Among the people aged 25 to 49, 1.1 million people are unemployed due to family responsibilities (about 1 million of them are women). In addition, about 940,000 people in this age group are unable to work due to illness (for this reason, the proportion of men and women is more even). 3.5 million people over the age of 50 quit the job market mainly because of illness and early retirement. Few people who retired early said they wanted to return to work.
From this, we can easily see that the main cause of “economic inactivity” is “physical discomfort”, which has increased by 476,000 since the beginning of 2020. A report of the British House of Lords in December 2022 emphasized the reasons such as the increase in early retirement and the rise in disease level. Since the publication of the report, the number of retirees has fallen back to the pre-epidemic level. The report also said that some jobs may not improve the employment rate, for example, restaurants and hotels have the highest vacancy rate, because the industry often shifts, requires high physical strength and has low wages. However, on closer inspection, this is not the answer. According to statistics, more than half of the people waiting for nursing have not reached working age. The biggest driver of the increase in waiting list by treatment type (such as musculoskeletal problems) is also inconsistent with the reported condition of long-term patients (usually related to mental health).
On the contrary, the main reason lies in the welfare system. The last Labour government and the Conservative government led since 2010 have gradually made it more difficult for applicants to obtain disability benefits. This helps to prevent fraud and maintain a low rate of economic inactivity. But some people with real needs have been wrongly deprived of welfare. In 2019, after several high-profile cases in which people were declared fit for work and then died, the government changed its direction to make it easier for people to get benefits. The success rate of claims filed in 2019-2020 exceeded 80%, compared with 35% ten years ago.
At the same time, improper incentives have been added. The old system promoted those who temporarily lost their ability to work to return to work immediately after their illness improved. The new regulations have greatly increased the relative reward for claiming permanent incapacity. Those who are thought to never return to work now get twice as much money as those who expect to return to work one day. This gives people a strong incentive to exaggerate their diseases and stop looking for jobs.
The number of people who don’t work has a wider impact. The reduction in the size of the labor force means that the taxes paid for services such as the national medical service system are reduced, and welfare expenditures such as unemployment benefits are increased. Since welfare recipients usually have less money to spend than working people, it also means spending less on the street. This, in turn, is not good for enterprises and the employees they want to hire, and may also affect the number of jobs that those who are looking for jobs can find.
In view of this situation, policy makers should find ways to tighten their policies. While being careful not to punish those who are really sick, they should encourage those who have the ability to return to work or even take part-time jobs. This means increasing the benefits for people who are temporarily incapacitated, and periodically reassessing the beneficiaries to see if their health conditions have improved, which has rarely happened so far.
In addition, experts believe that expanding the number of people who support returning to the job market is the key, and the employment center should expand the scope of attention and provide more targeted support. At present, only one-tenth of the unemployed elderly and disabled people get help in finding jobs every year. The government should focus on supporting the disabled, people with long-term health problems and parents with children.
Post time: Oct-18-2023