Britain’s chronic problem with people dropping out of the workforce will only get worse over the next three years because the population is changing shape, according to the Office for National Statistics.
(Bloomberg) — Britain’s chronic problem with people dropping out of the workforce will only get worse over the next three years because the population is changing shape, according to the Office for National Statistics.
By 2026, there will be 726,000 more inactive people in the UK aged 16 to 64 than before the pandemic, the government’s statistics office said Friday. The figures raise fresh concerns about staff shortages that are causing havoc among employers, driving up pay and pushing inflation higher.
There has already been an increase of 520,000 in the number of working age people neither in work nor looking for a job since February 2020, according to the most recent labor force data.
The trend has left businesses scrambling for staff and caused the Bank of England to lower its estimate of long-term economic growth to just 0.7%, from 2.7% before the 2008 financial crisis. The government will unveil a series of measures to bring back the lost workers in the budget this month.
New analysis by the ONS suggests that more than half of the increase, 59%, can be explained simply by demographics. There’s larger numbers of 60-64 year olds, and that group always has been more prone to leave work early. There’s also growth in the number of 16-17 year olds in school.
However, the remaining increase is mainly down to higher levels of long-term sickness, which rose by 462,000 between September 2019 and September 2022, the ONS said. That was about 420,000 more than would have been expected simply from the demographic changes.
About 220,000 more people aged 50-59 dropped out between September 2019 and September 2022 than can be explained by demographics, the ONS said. A further 71,500 extra have quit in the 18-29 year old age group.
By 2026, the number of inactive working age people in the UK will be 9.23 million — up from 8.5 million before the pandemic. On pre-pandemic demographic trends alone, which removes the higher sickness levels, inactivity would have been 9.07 million in 2026.
About 220,000 more people aged 50-59 dropped out between September 2019 and September 2022 than can be explained by demographics, the ONS said. A further 71,500 extra have quit in the 18-29 year old age group.
Among those reporting long-term sickness as their main reason for inactivity, “the increase is largely caused by an increase in ‘mental illness and nervous disorders’ in younger age groups and an increase in ‘other health problems or disabilities’ and ‘problems connected with back or neck’ for older age groups,” the ONS said.
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