Non-employment and labour availability

(2003) - Jerry Jones, Michael Joyce, Jonathan Thomas

Journal: Quarterly Bulletin Autumn
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Tags:: #paper #SocialClass #school-to-work #Transition #Education #Unemployment
Cite Key:: [@Jones2003]

Abstract

According to the Labour Force Survey, about 20% (approximately 7.5 million) of the non-student working-age population were not in paid employment in 2002. Of these people about one in five were classified as unemployed, with the remainder labelled as ‘inactive’. Despite this categorisation, however, some groups in the so-called inactive population are as likely to move into employment as those classified as unemployed, so any comprehensive measure of labour availability needs to incorporate information on the characteristics of the non-employed pool as a whole. This paper describes the key trends in the demographic and skill structure of the non-employed population since the mid-1980s and contrasts them with those in employment. It also attempts to draw out the implications of these trends for overall labour availability, building on recent Bank research which models individual transition rates from non-employment into employment.

Notes

“Economists typically explain this phenomenon by pointing to reasons why the equilibrium or natural rate of unemployment may have fallen.(1) For example, Nickell (2001) suggests that the main factors behind the fall in equilibrium unemployment over the past 20 years have been the declining role of trade unions in wage bargaining and the tightening of the benefit system” (Jones et al., 2003, p. 291)

“one other factor that may also be relevant to explaining the lack of response of wage inflation to an apparently tighter labour market is that the unemployment rate itself may be too restrictive a measure of labour availability.” (Jones et al., 2003, p. 291)

“Labour Force Survey, about 20% (approximately 7.5 million) of the non-student working-age population were not in paid employment in 2002” (Jones et al., 2003, p. 291)

“one in five were classified as unemployed, with the remainder labelled as ‘inactive’.” (Jones et al., 2003, p. 291)

“the trend in the aggregate working-age non-employment rate (excluding students)(5) shows a clear downward path over the period since 1984 (see Chart 1). This decline has overwhelmingly reflected declining unemployment, which fell by 1.5 million or nearly 5 percentage points from 1984 to 4.0% in 2002, with most of this fall occurring after 1992.” (Jones et al., 2003, p. 292)

“In contrast to unemployment, the inactivity rate since the mid-1980s has remained remarkably stable at a little under 20%” (Jones et al., 2003, p. 292)

“While the non-employment rate for men has remained little changed, the female non-employment rate has declined consistently since the mid-1980s.” (Jones et al., 2003, p. 293)

“This rise in male inactivity has been large enough to raise the share of men in non-employment by around 5 percentage points since the mid-1980s to over 40%.” (Jones et al., 2003, p. 293)

“As highlighted by a number of authors (see eg Gregg and Wadsworth (1999) and Nickell (2001)), the rise in male inactivity since the mid-1980s has coincided with a similar rise in men reporting long-term sickness or disability (see Chart 5)” (Jones et al., 2003, p. 293)

“There has been little change in relative age-related unemployment rates since 1984 (see Chart 7)” (Jones et al., 2003, p. 293)

“Non-employment tends to be much higher for those with low skill levels.” (Jones et al., 2003, p. 293)

“Male inactivity rates across each of these educational groups have all risen over the period, with much the largest rise among the low skilled (those with less than the GCSE qualification), where rates have risen by nearly 10 percentage points since the end of the 198 0s to 23% (see Chart 9).” (Jones et al., 2003, p. 293)

“the proportion of men among the non-employed has increased, so it is hardly surprising that, as Charts 15 and 16 show, the male share in total employment has fallen” (Jones et al., 2003, p. 296)

“There has been a dramatic improvement in the educational attainment of both the non-employed and the employed groups, which is most evident in the” (Jones et al., 2003, p. 296)

“declining share of those with less than GCSE qualifications and the rising share of those with degrees (see Charts 19 and 20).(1) But it is also evident that the improvement has been more marked for those in employment. Between 1984 and 2002, the percentage of low skilled in employment almost halved, to under 25%, while their percentage share in non-employment fell from two thirds to a half.” (Jones et al., 2003, p. 298)

“t is clear from the table that employment transitions among the non-employed vary considerably across different demographic and education categories.” (Jones et al., 2003, p. 298)