Worklessness Risks Growth

In their 12th June edition, the Telegraph ran an article with the headline “Worklessness risks growth after hitting 13-year high”. The writer, Tim Wallace quoted Tony Wallace of the Institute of Employment Studies, and Alexandra Hall-Chen of the Institute of Directors, as saying that this was a Serious Issue the like of which had never been faced by the UK economy since, well, the last time.

Wallace should have told them, and the ONS (whose skills at data collection I don’t question, but who are no better than anyone else at providing interpretation and context), to hop on a bus.

For one thing, comparisons with previous highs some random period in the past are meaningless: there’s always a time when it was a) this bad, b) worse, c) better. Choose your year. I’ll choose 1995, because no-one was complaining about worklessness then.

Next, always check that the quantity they are talking about is what you think it is. “Workless” in this article means “economically inactive according to the ONS Labour Force Survey”. Its age range is 16-64.

Wait. 16? Aren’t they still at school? Indeed, isn’t half the population between 16 and 21 at school, college or university? Yep. Then, according to you and me, they aren’t “economically inactive” - they are doing what the economy needs them to do. Guess how many students there are in 9.5m “workless”? 2.65 million. So really, there are only 6.84m “really workless” people. In 1995, there were 7.16m “really workless” people.

In 1995, 2.87m people were looking after their family and home - which is work whenever I do it, so let’s correct for that as well. In 2024, that was 1.73m, so that in 2024 there were 5.11m “really workless” people and in 1995 there were 4.29 “really workless” people. The difference is a combination of long-term sick and “other”, as advertised by the press.

However… in 1995 there were 25.14m people employed, 2.47m unemployed, and 4.29m really workless. In 2024 there were 32.9m people employed (!), 1.42m unemployed, and 5.11 really workless. The number of 16-64 year olds went up by 16%, the number employed went up by 25% (!), the number unemployed went down in absolute terms, and the number of really workless went up by 19%.

So this economy, compared to the heady days of 1995, is employing 7.7m more people, has reduced unemployment, supports more students, has more women out at work, and someone thinks that 0.8m people being long-term sick is going to hold it back? I don’t think so. It’s 2% of the working population, which assuming they all worked and contributed average GDP / head, would be an increase in GDP that could be wiped out by one lousy decision in the Treasury or the City.