Concerns about a rise in economic inactivity have prompted new policies aimed at discouraging early retirement and encouraging the labour force participation of women with young children. Such interventions would be more cost-effective if targeted at particular disadvantaged groups.
www.economicsobservatory.com
I was at first surprised to read in your quoted piece that the UK economic inactivity rate had remained similar since the seventies, and then of course I remembered that back then a lot of women stayed at home to look after children and the home. That was then pretty much the norm, especially in the period before that - say the fifties and sixties.
Of course the graph in the piece you quoted shows this when you see the change in the profile of women not in work over that time.
Interestingly, inactivity rates seem to be rising for men since Covid while for women the numbers remain similar to what they were, albeit that more women are economically inactive than men = 25% versus about 17% for men.
I am hypothesising that these inactivity rates may be greater than those of competitor economies. I don't know this, but it is perhaps worth investigation.
Another possibility is that we have a large black economy - probably larger than nations which are harder on undocumented working such as those in nearby European nations. One of the drivers of cross Channel illegal migration from safe, civilised and richer France, is said to be the ease with which unregistered illegal migrants can slot into the black economy. I have heard French politicians say so - whether it is true, I don't know, but it is a reasonable hypothesis and might be looked at. Wandering a round any UK inner city such as Newcastle with which I am familiar, it is obvious in migrant heavy districts that large amounts of cash trading is going on. Neither is it restricted to migrant people. You can easily negotiate a discount for cash payment with all kinds of workmen.
Low pay offered to workers in forms of employment taken up by migrants may also be a factor in lower GDP. Clearly, if we import hundreds of thousands of migrants happy to work for lower wages than the rest of us, there will be an impact on GDP per capita. That measure is intimately entwined with wage levels. The so called gig economy may be involved.
Thinking as I write this - on the fly - the balance of types of employment has changed significantly over half a century. Large numbers are now employed in low wage service jobs rather than the old more highly paid manufacturing roles that used to characterise our economy. Come to think of it - this must have a massive impact on GDP per capita - probably much more than the other things I have mentioned.
Whatever the cause of apparent lower UK productivity, GDP per capita, and economic activity, it is a serious issue as far as government expenditure is concerned because low paid people are not net tax contributors. This needs to be seriously looked into by the new government.
www.norden.org
www.independent.ie
www.heritage.org
