©NERIP 2005 What is the Economic Status of the Working Age Population? April 2005 Michael Jackson North East Regional Information Partnership

©NERIP 2005 Introduction  The purpose of this presentation is to contrast the definitions of economic engagement and the various data sources that provide insight into the policy theme of worklessness.  In particular the definitions used by the Social Exclusion Unit in recent reports and the Office for National Statistics through data collection in the Labour Force Survey are mapped against each other.  Additional data sources available for informing the theme include the stream of “benefits” data provided the administration systems of The Department for Work and Pensions.  Having mapped the definitions, comparative regional and and national data are presented to indicate the degree of disparity evident within the region.  The presentation concludes with a summary of the findings from the definitions and data.

Working Age population (Male 16-64, Female 16-59) Labour Force Survey Definitions Social Exclusion Unit Definitions The starting point is to consider the entire population who are of “working age” i.e. all males aged between 16 and 64 and all females between 16 and 59.

Working Age population (Male 16-64, Female 16-59) Economically ActiveEconomically Inactive Labour Force Survey Definitions Social Exclusion Unit Definitions The Labour Force Survey classifies each person as being either “Economically Active” or “Economically Inactive”

Working Age population (Male 16-64, Female 16-59) Economically ActiveEconomically Inactive Labour Force Survey Definitions Social Exclusion Unit Definitions In the Labour Force Survey, Economically Active includes those on Government Schemes as well as those who are registered Unemployed. Employees Self Employed Unemployed Government Schemes

Working Age population (Male 16-64, Female 16-59) Economically ActiveEconomically Inactive Would not Like to Work Labour Force Survey Definitions Wants a job Social Exclusion Unit Definitions The Economically Inactive are divided into those who want a job and those who do not want to work – a person’s category being determined by how they answer a survey question. Employees Self Employed Unemployed Government Schemes

Working Age population (Male 16-64, Female 16-59) Economically ActiveEconomically Inactive Not Seeking WorkSeeking Work Would not Like to Work Labour Force Survey Definitions Wants a job Social Exclusion Unit Definitions The Economically Inactive can also be divided into those seeking work and those not seeking work. Those seeking work are a subset of those who want a job, since some of those who want a job may not be actively seeking work. This divides the Economically Inactive into 3 separate groups *Wants a Job and Seeking Work *Wants a Job and Not Seeking Work *Doesn’t Want a Job (and Not Seeking Work) Employees Self Employed Unemployed Government Schemes

Working Age population (Male 16-64, Female 16-59) Economically ActiveEconomically Inactive Employees Self Employed Unemployed Government Schemes Not Seeking WorkSeeking Work Discouraged workers Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student Would not Like to Work Long term sick/disabled No reason/other Temporary sick/injured Looking after family/home Student Labour Force Survey Definitions Wants a job Social Exclusion Unit Definitions Retired Not want/need job Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student Each of these three groups of the Economically Inactive are further subdivided by “reason”– note that some of the reasons (e.g. being a Student) can appear in more than one group.

Working Age population (Male 16-64, Female 16-59) Economically ActiveEconomically Inactive Employees Self Employed Unemployed Government Schemes Not Seeking WorkSeeking Work Discouraged workers Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student Would not Like to Work Long term sick/disabled No reason/other Temporary sick/injured Looking after family/home Student Labour Force Survey Definitions Wants a job Social Exclusion Unit Definitions Retired Not want/need job Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student The Labour Force Survey definition of “Economically Inactive” is, therefore, a complex mix of attitude and circumstance.

Working Age population (Male 16-64, Female 16-59) Economically ActiveEconomically Inactive Employees Self Employed Unemployed Government Schemes Not Seeking WorkSeeking Work Discouraged workers Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student Would not Like to Work Long term sick/disabled No reason/other Temporary sick/injured Looking after family/home Student Seeking Work Labour Force Survey Definitions Wants a job Social Exclusion Unit Definitions Retired Not want/need job Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student If we implicitly assume that those on Government Schemes and the Unemployed are also Seeking Work…

Working Age population (Male 16-64, Female 16-59) Economically ActiveEconomically Inactive Employees Self Employed Unemployed Government Schemes Not Seeking WorkSeeking Work Discouraged workers Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student Would not Like to Work Long term sick/disabled No reason/other Temporary sick/injured Looking after family/home Student Seeking Work Labour Force Survey Definitions “Unemployed”“Economic Inactivity” Wants a job Social Exclusion Unit Definitions Retired Not want/need job Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student If we implicitly assume that those on Government Schemes and the Unemployed are also Seeking Work… …then we can start to map onto the definitions of the Social Exclusion Unit

Working Age population (Male 16-64, Female 16-59) Economically ActiveEconomically Inactive Employees Self Employed Unemployed Government Schemes Not Seeking WorkSeeking Work Discouraged workers Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student Would not Like to Work Long term sick/disabled No reason/other Temporary sick/injured Looking after family/home Student Seeking Work Labour Force Survey Definitions “Unemployed”“Economic Inactivity” Worklessness Wants a job Social Exclusion Unit Definitions Retired Not want/need job Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student The workless are simply those without work – everyone except those who are employed or self-employed. But as the chart shows, there are a whole variety of reasons why a person can be workless

Working Age population (Male 16-64, Female 16-59) Economically ActiveEconomically Inactive Employees Self Employed Unemployed Government Schemes Not Seeking WorkSeeking Work Discouraged workers Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student Would not Like to Work Long term sick/disabled No reason/other Temporary sick/injured Looking after family/home Student Seeking Work Labour Force Survey Definitions “Unemployed”“Economic Inactivity” Worklessness Wants a job Social Exclusion Unit Definitions Retired Not want/need job Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student Having explained the terminology and definitions we can now add some numbers. These numbers are: *Estimates based on a survey *As a result we cannot readily identify and allocate workless individuals to a “reason” *Percentages are expressed as the percentage of the working age population

Long term sick/disabled No reason/other Temporary sick/injured Looking after family/home Student Working Age population (Male 16-64, Female 16-59) Economically ActiveEconomically Inactive Employees Self Employed Unemployed Government Schemes Not Seeking WorkSeeking Work Discouraged workers Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student Would not Like to Work Seeking Work Labour Force Survey Definitions “Unemployed”“Economic Inactivity” Worklessness Wants a job Social Exclusion Unit Definitions Retired Not want/need job Long term sick/disabled Not looking/no reason/other Temporary sick/injured Looking after family/home Student 1,526,000 1,122,000 (74%)404,000 (26%) 952,000 (62%) 83,000 (6%) 104,000 (7%)300,000 (20%) 391,000 (25%)13,000 (1%) 91,000 (6%) 89,000 (6%)391,000 (25%) 480,000 (32%) Local Labour Force Survey March 2003 to February 2004 Crown Copyright All rates are of Total Working Age Population 76,000 (5%)

©NERIP 2005 A number of points emerge from a comparison of Regional and National figures 74% 62% 6% 78% 65% 9% 0%20%40%60%80% Economically Active Employed Self Employed 5% 4% Unemployed/Gov Scheme 26% 7% 1% 6% 20% 25% 22% 6% 1% 5% 16% 20% Economically Inactive Wants a Job Wants a Job/Seeking Work Wants Job/Not Seeking Work Does Not Want a Job Total Not Seeking Work 6% 25% 32% 5% 21% 26% "Unemployed" "Economic Inactivity" "Worklessness" UK North East

©NERIP 2005 A number of points emerge from a comparison of Regional and National figures 74% 62% 6% 78% 65% 9% 0%20%40%60%80% Economically Active Employed Self Employed 5% 4% Unemployed/Gov Scheme For the “Economically Active” population (LFS Definition)… …the rate is 4 percentage points lower in the North East than nationally (74% vs 78%) …nationally, there 3 percentage points more of the working age population in each of the categories of Employed and Self-Employed (65% vs 62% and 9% vs 6%, respectively) … the North East unemployment rate is 25% higher than the national average but only affects 5% of the working age population (5% vs 4%)

©NERIP % 62% 6% 5% 26% 7% 1% 6% 20% 25% 6% 25% 32% 78% 65% 9% 4% 22% 6% 1% 5% 16% 20% 5% 21% 26% 0%20%40%60%80% Economically Active Employed Self Employed Unemployed/Gov Scheme Economically Inactive Wants a Job Wants a Job/Seeking Work Wants Job/Not Seeking Work Does Not Want a Job Total Not Seeking Work "Unemployed" "Economic Inactivity" "Worklessness" UK North East A number of points emerge from a comparison of Regional and National figures

©NERIP % 7% 1% 6% 20% 25% 22% 6% 1% 5% 16% 20% Economically Inactive Wants a Job Wants a Job/Seeking Work Wants Job/Not Seeking Work Does Not Want a Job Total Not Seeking Work A number of points emerge from a comparison of Regional and National figures 0%20%40%60%80% Looking at the factors underlying the “Economically Inactive” population (LFS Definition)… …20% of the North East’s working age population is Economically Inactive but “does not want a job”, this is 25% higher than the national rate (20% vs 16%) …25% of the North East’s working age population is Economically Inactive but “not seeking work”, this is 4 percentage points higher than the national average (25% vs 21%)

©NERIP % 62% 6% 5% 26% 7% 1% 6% 20% 25% 6% 25% 32% 78% 65% 9% 4% 22% 6% 1% 5% 16% 20% 5% 21% 26% 0%20%40%60%80% Economically Active Employed Self Employed Unemployed/Gov Scheme Economically Inactive Wants a Job Wants a Job/Seeking Work Wants Job/Not Seeking Work Does Not Want a Job Total Not Seeking Work "Unemployed" "Economic Inactivity" "Worklessness" UK North East A number of points emerge from a comparison of Regional and National figures

©NERIP % 25% 32% 5% 21% 26% "Unemployed" "Economic Inactivity" "Worklessness" UK North East A number of points emerge from a comparison of Regional and National figures 0%20%40%60%80% The bottom line is that “worklessness” accounts for 1 in 3 of the Region’s population of working age whilst nationally the rate is 1 in 4 (32% vs 26%)

©NERIP % 62% 6% 5% 26% 7% 1% 6% 20% 25% 6% 25% 32% 78% 65% 9% 4% 22% 6% 1% 5% 16% 20% 5% 21% 26% 0%20%40%60%80% Economically Active Employed Self Employed Unemployed/Gov Scheme Economically Inactive Wants a Job Wants a Job/Seeking Work Wants Job/Not Seeking Work Does Not Want a Job Total Not Seeking Work "Unemployed" "Economic Inactivity" "Worklessness" UK North East A number of points emerge from a comparison of Regional and National figures Source: Labour Force Survey

©NERIP 2005 The benefits system provides a means of identifying some, though by no means all, workless individuals Job Seekers Allowance Criteria Capable of work Available for work Actively seeking work Criteria Capable of work Available for work Actively seeking work Individuals receiving this benefit are part of the Unemployed reason group (LFS definition). Consequently, they also fall within the broader “Unemployed” group (SEU definition) According to DWP estimates, there are 49,500 individuals in this group (3.2% of working age population). This compares to total “Unemployed” of 89,000 (i.e. just over half, 56%) Incapacity Benefit Criteria Paid when Statutory Sick Pay has ended Individual has paid NI contributions Incapable of work due to sickness or disability Criteria Paid when Statutory Sick Pay has ended Individual has paid NI contributions Incapable of work due to sickness or disability Severe Disablement Allowance Criteria Incapable of work due to sickness or disability for  28 weeks Never been able to work Can’t get IB because of insufficient NI Criteria Incapable of work due to sickness or disability for  28 weeks Never been able to work Can’t get IB because of insufficient NI Individuals receiving this benefit are part of the “Economic Inactivity” group (SEU definition) According to DWP estimates, there are 159,700 individuals in this group (10.5% of working age population). Individuals receiving this benefit are also part of the “Economic Inactivity” group (SEU definition) According to DWP estimates, there are 14,900 individuals in this group (1.0% of working age population). Jointly, IB and SDA claimants account for a total of 174,600 out of an estimated 391,000 in the “Economic Inactivity” group (SEU definition) (I.e. just under half, 45%) DWP estimates`are based on a 5% sample taken in February 2004 (timeframe chosen for consistency with LFS)

©NERIP 2005 A comparison of Regional and National figures shows higher than average rates on benefits Job Seekers Allowance Criteria Capable of work Available for work Actively seeking work Criteria Capable of work Available for work Actively seeking work Incapacity Benefit Criteria Paid when Statutory Sick Pay has ended Individual has paid NI contributions Incapable of work due to sickness or disability Criteria Paid when Statutory Sick Pay has ended Individual has paid NI contributions Incapable of work due to sickness or disability Severe Disablement Allowance Criteria Incapable of work due to sickness or disability for  28 weeks Never been able to work Can’t get IB because of insufficient NI Criteria Incapable of work due to sickness or disability for  28 weeks Never been able to work Can’t get IB because of insufficient NI All percentages are of the total population of working age NEGB 3.2%2.5% A third more individuals on JSA than the national average 10.5% 6.7% IB rate is 75% higher than the national average 1.0%0.7% 11.5% 7.4% Size of “Economic Inactivity” group is 4 percentage points above the national average – approximately 60,000 people

©NERIP 2005 Claimant Numbers Income Benefit Benefit Only Benefit Only Benefit +DLA Benefit +DLA Total Individuals Total Individuals JSA 49, ,500 IB 103,000 56, ,700 SDA 1,600 13,300 14,900 None 18,800 Total DLA 88,900 Health within the Region is a factor and care is needed when interpreting claimant numbers Disability Living Allowance Not an “income replacement” benefit Determined by needs Individual requires help looking after self and/or has mobility difficulties Allows the individual to pay for carers Do not have to be in receipt of an “income replacement” benefit (JSA, IB, SDA) though nearly 80% of DLA claimants are Not an “income replacement” benefit Determined by needs Individual requires help looking after self and/or has mobility difficulties Allows the individual to pay for carers Do not have to be in receipt of an “income replacement” benefit (JSA, IB, SDA) though nearly 80% of DLA claimants are NEGB 5.8%4.4% A third more individuals on DLA than the national average Other health data (e.g. see Indicators section of provide supporting evidence that people in the North East have significantly more health problems than elsewhere. As % of Working Age Populations NE, GB Benefit Only Benefit Only Benefit +DLA Benefit +DLA Total Individuals Total Individuals 3.2% 2.5% 0.03% 3.2% 2.5% 6.8% 4.1% 3.7% 2.6% 10.5% 6.7% 0.1% 0.9% 0.6% 1.0% 0.7% 1.2% 5.8% 4.4%

©NERIP 2005 Conclusions  The Economic Status of individuals is a complex area to interpret, often related to an individual’s attitude and circumstance. Numerous overlapping terms are used to describe it, with a variety of different meanings to the various audiences.  The North East has a greater rate of “worklessness” than the national average by over 25%. The challenge to gain parity with the UK means that over 90,000 individuals need to gain work.  1:8 in the region are in receipt of “Incapacity Benefits”, while nationally it is 1:14. But the region’s population has significantly “poorer” health that many other regions, reflected in the worst rates in the UK for respiratory, circulatory diseases and life expectancy!  The challenges for the region is to re-engage individuals back into the Labour Market. The “lesser complex” cases can be targeted with interventions for early gains, but the cost of identification and provision for the “more complex” cases should not be underestimated.

©NERIP 2005 What is the Economic Status of the Working Age Population? April 2005 Michael Jackson North East Regional Information Partnership