Friday, 12 April 2013

Unemployment statistics: not the whole story

There have been many very interesting posts of economic trend data following the death of Mrs Thatcher. one statistic I have seen less often is the economic inactivity rate. For those who don't think a whole lot about employment figures, being 'economically inactive' is not the same as unemployed. In fact what is officially called 'the economically active' population consists of the employed, the self employed and the unemployed. You are 'active' in the labour market as long as you are looking for work,even if you didn't find any. The corollary of this is that the unemployment rate is not the % of the whole working age population who are unemployed, it is the % of the economically active population. Then there are the economically inactive, who are all those who are not looking for work. The most common reason to be inactive is that you are looking after the home and family, and this (still) mostly applies to women. The second most common reason is what used to be called 'permanent sickness', i.e. long term ill health bad enough to mean a person is not able to work. This 'permanent sickness' is what all the new rules about claiming out-of-work benefits is about. The third most common reason is early retirement. Over time, what has happened is unemployment fell and stayed low, while permanent sickness and early retirement rose. By 2005 or thereabouts, an unemployment rate of around 6% co-existed with an economic inactivity rate of 16% in men of working age.
Finally got the diagram into this document, phew! What a performance. What I hope it shows is how after 1995 or so, unemployment fell dramatically while economic inactivity continued to rise. This diagram is for men only, so this has nothing to do with domestic duties. Nor has it got anything to do with serious ill health, as at this same time life expectancy in men was rising fast.

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