Economic Inactivity and Poor Health: Towards Place-based Policy Responses
Rob Richardson, Sarah Weakley
As part of a wider package of work on economic inactivity, IPPO Scotland has conducted a review of policy interventions which seek to address economic inactivity, with a focus on poor health and disability.
Economic inactivity and levels of long-term sickness are high
High levels of economic inactivity – people of working age who are not working or seeking employment – have become a stubborn policy problem in the UK. Overall, 410,000 more people were economically inactive in May-July 2023 compared with December-February 2020, before the COVID-19 pandemic. People can be economically inactive for several reasons, including temporary or long-term sickness, retirement, looking after family or the home, and being a full-time student. Trends in long-term sickness and disability are particularly concerning, however. 490,0001 more people were inactive due to long-term sickness in May-July 2023 compared with December-February 2020. This brings the total number of people who are economically inactive due to long-term sickness to 2.6 million, which is 30% of the UK’s overall number of economically inactive people. Similarly, the number of new monthly disability claimants is double pre-pandemic levels at approximately 30,000 new claimants per month. Within these overarching trends lie significant regional variation across the UK, with economic inactivity often particularly concentrated in certain neighbourhoods.
Towards local, place-based responses to economic inactivity
IPPO Scotland’s review covered a range of interventions from diverse geographic and policy contexts, and spatial scales, including initiatives led by the UK Government, devolved governments, local authorities, the third sector, and cross-sector partnerships.
It identified that high levels of economic inactivity are best viewed as a public health policy problem rather than solely through the lens of the labour market. Policy responses should therefore be holistic, rather than focusing solely on getting people into work. This requires multi-dimensional solutions, which centre on health but draw on a range of policy areas and public services, including education and skills, childcare, housing, and transport.
The report identified an important role for localised place-based responses to economic inactivity. This is particularly important as ‘one-size-fits-all’ responses at national level – such as extending tax relief on pensions – are unlikely to work on their own, or to be cost-effective. Local approaches can better target areas where the challenges are greatest, and ensure that public services are aligned in the delivery of a cross-cutting policy response.
This raises important questions as to the desired outcomes of policy interventions to address economic inactivity, and how these outcomes should be measured. A broader approach to understanding ‘good’ outcomes beyond short-term job starts is therefore necessary, with better health and wellbeing viewed as a fundamental component of improved long-term labour market outcomes.
Further IPPO work on this topic can be accessed as follows:
Initial blog introducing the work package
Summary blog of the overall conclusions
Roundtable on economic inactivity among the over 50s
Policy review on economic inactivity among the over 50s
Roundtable on economic inactivity and poor health
- This figure is higher than the overall increase in economic inactivity because the overall figure is offset by a reduction in people reporting other reasons for inactivity during this period. ↩︎