The economic inactivity rate in the UK between November 2023 and January 2024 is 21.8%, showing that more than a fifth of adults of working age are not actively job hunting. Approximately 9.2 million individuals aged 16 to 64 are economically inactive, which is over 700,000 higher than pre-pandemic numbers.
The Office for National Statistics points out that around one-third of the working-age inactive population is out of the job market due to long-term illness. Other factors include education commitments, caring for family members, disabilities, early retirement, and disillusionment with the job market.
Ben Chu, Economic Editor of BBC Newsnight, speaking at our ‘Budget breakfast’ event in March, stated: “The number of younger people who say they're inactive because of poor mental health is a really rising problem.”
These figures are crucial, especially as the UK's economic status is being closely watched, with an upcoming general election and both major parties promising to boost growth. The next update on economic inactivity is set for release on 16 April 2024.
What is economic inactivity?
Economic inactivity refers to the part of the population not actively participating in the labour market, either by working or seeking employment. Anyone who is unemployed but not actively looking for work, including those unable to work due to factors like illness, disability, or caring responsibilities, would be considered economically inactive in the UK.
The Office for National Statistics has defined the reasons for economic inactivity as:
Student
Looking after family/home
Temporary sick
Long-term sick
Discouraged workers - those who are not looking for work because they believe no jobs are available
Retired
Does not want a job
Wants a job
Other – those who are awaiting the results of a job application, have not yet started looking for work, do not need or want employment, have given an uncategorised reason for being economically inactive, or have not given a reason for being economically inactive.
Attracting talent back into the labour market
Many outside the labour market can be accommodated to make it possible for them to work again, with some adjustments to standard working conditions in consideration of their needs.
Employers in the UK can take several actions to help economically inactive people back into work and attract them to their roles:
Flexible working arrangements
Those who are economically inactive due to caregiving responsibilities or other obligations may feel they can’t commit to a job because they might be needed at any time of the day or night. Offering working arrangements, such as part-time or flexible hours, remote working options, job-sharing, or flexible scheduling, can make employment more accessible.
Skills development and training
Providing opportunities for skills development and training can help economically inactive individuals acquire the qualifications and expertise needed to succeed in the workforce. This can include on-the-job training, internships, apprenticeship programmes, or support for further education and vocational training.
Returnship programmes, similar to internships, specifically target individuals who have taken a career break, offering short-term placements with the possibility of permanent employment afterwards.
When employers invest in their people, they often reap the biggest returns. Not only are you increasing the value of your employee, which can boost their productivity, you’re also sparking greater loyalty and engagement.
Job redesign and accommodations
Many hiring managers will recycle the same job descriptions and person specifications the company has always used, and not consider which aspects are limiting their search. When employers rewrite their job specs and adverts, they are more likely to spot and remove unnecessary elements that could restrict the number of applications.
Employers should look to adapt job roles and responsibilities to accommodate the needs of individuals who might be economically inactive due to disabilities or health conditions. This may involve adjusting the physical workspace, providing assistive technology, or offering flexible work arrangements.
Inclusive and supportive work environment
When workplaces were more homogeneous, the unspoken rules and social norms of work were stricter. Now, with many businesses adopting diversity initiatives and inclusive practices, people can be more authentically themselves at work.
For example, neurodivergent people who may have felt excluded or out of place in the workforce, due to their different ways of thinking, might feel able to return if they perceive an employer to be inclusive and supportive of individual needs.
Diversity and inclusion training, employee assistance programmes, and initiatives to promote work-life balance can all promote employee wellbeing and help attract economically inactive individuals back into work.
Promotion of social responsibility
In recent years, the social values of a company have become much more important to prospective employees, and many will take care to research the ethos and social impact of an employer before joining. Proving your company’s commitment to social responsibility and community engagement can be highly attractive – especially to younger jobseekers.
Partnerships with support organisations
Partnering with organisations that support people can signal to jobseekers that your business cares about its employees and social responsibility. Employers can connect with economically inactive individuals through disability employment services or local community groups, and these organisations can provide ongoing support to employees.
Businesses should implement corporate social responsibility programmes, volunteering opportunities, or partnerships with local charities and social enterprises. Universities are also a good place to find students and nurture their path to working in the accountancy sector.
Financial incentives and benefits
Over the last few years, people have struggled to pay their bills. Economically inactive people may choose to return to work out of necessity.
Those who don’t need to work owing to retirement, discouragement (believing there aren’t any available jobs) or who simply don’t want a job, might just find your employee benefits and additional financial incentives attractive, and others may be tempted by your wellbeing or lifestyle initiatives.
According to our salary and benefits survey of 5,000 professionals at the end of 2023, the most popular benefits are an annual salary increment (45%), four-day working week (36%) and flexi time (36%). Competitive salaries and benefits packages, bonuses, healthcare benefits, retirement plans, and other perks might also make employment more attractive.
Need help filling your vacancy, or finding a suitable role for you? Reed’s accountancy and finance specialists can help. Contact our nearest Reed office now.
