Office for National Statistics (ONS) data indicating that work-limiting health conditions are the single biggest contributor to economic inactivity is making the business case for increased investment in healthcare, according to consultants Broadstone.
Hargreaves Lansdown also argued that the latest ONS data showed many people had been “forced to power through the pain“ to keep their jobs and maintain their lives.
The ONS data showed an increase in the prevalence of work-limiting health conditions was the largest contributing factor to the rise in the economic inactivity rate from 2019 to 2022.
The percentage of people who reported a long-lasting health condition that limits either the kind or amount of work they can do rose from 16.4% to 18.1% over the same period.
The data also revealed that between 2019 and 2022, the economic inactivity rate among the population aged 16 to 64 years rose by just under half (0.45) a percentage point, from 21.23% to 21.68%.
The ONS noted these figures were based on the annual population survey, which smooths quarterly trends and therefore differs from headline labour market data.
The body added that the rise in work-limiting health conditions would have raised economic inactivity by an estimated 0.63 percentage points (138% of the actual rise) if the probability of being economically inactive by age and health status had remained at 2019 values.
The category of other problems or disabilities accounted for the majority of this effect.
The ONS pointed out economic inactivity was strongly related to age, with both younger and older people displaying markedly higher inactivity rates.
Consequently, it added the changing age structure of the population aged 16 to 64 years, particularly an increase in the proportion of people aged 60 to 64 years between 2019 and 2022 as the last of the “baby boomers” enter their early 60s, could be expected to increase inactivity independent of any coronavirus pandemic-induced behaviour changes.
Deteriorating health is primary driver of economic inactivity
Brett Hill, head of health and protection at Broadstone, (pictured) said: “There are an array of positive and negative factors that drive economic inactivity – from those who saved more during the pandemic and may have been able to retire earlier than expected, to those who are struggling with the cost of living and must unretire to top up their income and pension pots.
“However, this research is further evidence that the deteriorating health of the nation is the primary driver of economic inactivity and is causing lasting damage to workforces up and down the country.
“Just this week, the labour market statistics uncovered that the number of people not working in the UK due to long-term sickness had risen to yet another new record of 2.55 million.
“With the public health service struggling in the aftermath of the pandemic, workers are finding it difficult to access the treatments that they need to make a quick recovery and return to the workforce which is pushing up economic inactivity.
“It is driving a growing business case for investment in healthcare with this issue now surging right to the top of the boardroom agenda.
“Chief executives are recognising that they need to keep their staff fit and healthy to achieve growth, so we are expecting demand for private healthcare to continue to grow.”
Busting boomer myths
Sarah Coles, head of personal finance at Hargreaves Lansdown, added the ONS had “busted the myths” of healthy, shirking boomers, swapping work for the sofa in their early 60s, and “hunched-over homeworkers getting back problems that put them out of the game”.
“Economic inactivity comes down to the rise of a whole host of health conditions, and the fact the population is aging,” Coles added.
“In fact, it looks distinctly like an awful lot of people have been forced to power through the pain to put in a shift in later life.
“There’s not a hidden army of healthy boomers who flooded out of the workforce during the pandemic and need to be encouraged back to work. It’s true that there are more older people who are not working now.
“However this is not a sudden societal change, it’s a matter of demographics: older people were always more likely to be economically inactive, and the number of older people is increasing, which automatically pushes up the number of inactive older people.”
Coles added older people were also more likely to have a long-term health condition than those in mid-life, and work-limiting conditions are on the march – rising from 6.8 million in 2019 to 7.5 million in 2022.
“These health conditions mean you’re much less likely to be economically active,“ she continued.
“In 2022, 48.4% of people with a work-limiting health issue were economically inactive, compared to 15.8% among their peers in good health.
“In fact, there’s every sign that older people and those with health conditions are working through the pain.
“If the probability of inactivity by age and health had remained the same as it was in 2019, the rise in age would have increased inactivity by 0.29 percentage points, and the rise in health problems would have meant inactivity rose by 0.63 percentage points. In fact, overall it only rose 0.45 percentage points.”