Post-pandemic participation: exploring labour force participation in the UK, from the COVID-19 pandemic to the decade ahead

Despite unemployment reaching historic lows, a rise in economic inactivity means that the UK employment rate remains one percentage point lower than pre-pandemic. This paper investigates the causes and sets out some policy recommendations. The rise in economic inactivity since [Coronavirus Disease 2019] COVID-19 has not been a universal experience. The UK's labour force participation rate among 15-64-year-olds is still relatively high, but has fallen from the seventh of 38 OECD countries in 2019 to fifteenth in 2022. While there was an increase in flows from employment into economic...  [+] Show more

Despite unemployment reaching historic lows, a rise in economic inactivity means that the UK employment rate remains one percentage point lower than pre-pandemic. This paper investigates the causes and sets out some policy recommendations. The rise in economic inactivity since [Coronavirus Disease 2019] COVID-19 has not been a universal experience. The UK's labour force participation rate among 15-64-year-olds is still relatively high, but has fallen from the seventh of 38 OECD countries in 2019 to fifteenth in 2022. While there was an increase in flows from employment into economic inactivity due to retirement during the COVID-19 pandemic, the UK is facing a longer-term, and more widespread, rise in economic inactivity due to long-term sickness. This is part of a wider trend of rising disability and long-term sickness that is not limited to those out of the labour market: the number of working-age people with disabilities increased by 2.3 million between 2013 and 2022, with four-fifths (83 per cent) of this rise among people in employment.

Government efforts to boost activity should not focus solely on the newly inactive, since there are good reasons to think that policy will not reach many of them. Many have come from high-paying, professional jobs; many of these adults will be living comfortably in their early retirement, and government policy is unlikely to prompt them to 'un-retire'. Policy should instead focus on groups that saw significant improvements in the 2010s, both here and in other advanced economies: older workers, women with children, and those affected by rising ill-health and disability.

Excerpts from publisher's website.