The economic meaning of inactive

Nigel Williams, 6 February 2014

The economically inactive do not get so much attention when talking of employment levels. Migrant labour and the unemployment take centre stage and general rates of employment provide the accompaniment. An interesting counterpoint is provided by those termed ‘economically inactive’, especally when considering the regional variations.

Economically inactive as a term is most useful for distinguishing the unemployed from people not seeking work. Jobseekers command a lot of attention and while people are content to study, care for families or retire, there is less urgency to find a solution. Yet ‘inactive’, even economically, does them a disservice. Education at its best prepares people both to perform a skilled role in the labour market and to contribute to society beyond it. Bringing up children is literally, motherhood and apple pie, although it would be remiss not to mention that fathers can play that role too and other desserts are available. The growing number, as death rates fortunately decline, is retired people enjoying years after finishing work.

It is well known that there are large variations in employment patterns between regions. The last year-on-year of Labour Market Statistics showed, for London, a growth in employment of 97,000 with no reduction in unemployment at all. The explanation must lie in movements between regions, especially into London. The graph above shows that there are substantial variations amond the economically inactive as well. The numbers of adults neither doing nor looking for paid work in Wales, the North East, North West and Scotland have hardly grown over the last twenty years. London’s number has changed little since 2005, but the South West, East of England and, most of all, the South East have grown sharply.

As already stated, economically inactive people still bring value. The retired still have pensions to spend even if they are no longer receiving wages and salaries. However, unlike those in employment, they are not constrained to live near where they work. Friends, family and other considerations still matter in choosing where to live, but the earning imperative has gone. Where working migrants from other British regions are looking for both a job, which the south often provides, and a home, which is scarcer, the retired principally need a home. Civitas analysis ‘Finding Shelter‘ has recently looked at one of the extreme consequences of a lack of housing where people are looking for work. Bringing full employment to regions has long proved difficult but efforts to make places attractive to people post-retirement have the potential to enrich them both with people and resources. At the same time, it might deflate the south east bubble. If only moving house at all were not so prohibitively expensive, but that is another story.