Understanding the UK’s Rise in Economic Inactivity Since 2020
This Research & Policy Briefing outlines the main findings from a two-year project Levelling Up Labour Supply funded by the Economic & Social Research Council’s UK In a Changing Europe (Award Ref. ES/X005828/2). The main focus of the paper is on explaining the uneven geography across Great Britain in the rise since 2020 in economic inactivity (people not currently employed and not searching and/or available for work).
The rise in the UK’s economic inactivity rate has been geographically highly uneven. Rural areas and peripheral towns have recorded the largest increases, particularly in northern, western and coastal areas. Economic inactivity has fallen in much of London and the southeast. This geographical unevenness is mainly explained by poor health linked to the COVID-19 pandemic and population ageing as the tail of the babyboomers moved into their 60s. Brexit did not have an overall observable effect on local inactivity rates, but reductions in low-skilled EU migration to some rural areas appear to have affected levels of economic activity, most acutely parts of the Scottish Highlands and Lincolnshire
Background
The paper examines the effects of changes in health, EU and non-EU migrants, labour force ageing, pandemic infection rates, job availability, productivity, skills and rurality in explaining changes to economic inactivity across 168 GB NUTS3 areas. International comparisons are also made in trends in inactivity. Finally, policy implications are discussed in light of the fact that some places are short of workers while others are short of jobs.
This work was supported by the Economic & Social Research Council, Award Ref. ES/X005828/2.
Meet the Authors
Donald Houston
Donald Houston specialises in local labour markets, in particular unemployment, economic inactivity, health, migration and commuting. Other research interests include housing, transport and flooding. He has held a number of research grants and projects funded by the Economic and Social Research Council (ESRC), charities and local and central government. He was seconded to the Office for National Statistics (ONS) in 2023 and continues an association with ONS.
Kostas Kollydas
Kostas is a Research Fellow who joined City-REDI in May 2021. He is an applied economist whose research interests lie broadly in labour economics and the economics of education.
Maryna Ramcharan
Maryna joined City REDI as a Senior Policy and Data Analyst in May 2022. She will continue working on the set of projects as in her previous role as a Data Analyst at the WMCA in a partnership with WMREDI. Additionally, she will contribute to research on the skills, employment and labour market economy.
Paul Sissons
Paul's research expertise includes local and regional economic development, local and regional labour markets, labour market change and skills policy. His research has evaluated sub-national approaches to economic development, industrial strategy and inclusive growth. His work on skills has extended understandings of skills mismatch, and the drivers of employer demand for skills, at the regional and local level. His recent research has provided novel insights into important contemporary labour market issues of in-work poverty and weak pay progression.