Inflation crushes wage hikes
By Ross Clark

Remember Neets, the mainly-young people who are ‘not in employment, education or training’? A decade ago they were seen as a group which had grown at an alarming speed during the economic crisis in 2008/09. Many older people, by contrast, were continuing to work for longer, possibly as a result of their pensions having diminished in value. Following Covid, however, the profile of the working population has changed sharply again. Your typical Neet is now a professional aged 50 to 70 who has decided to throw in the towel prematurely.

The number of people counted as economically inactive by the Office for National Statistics grew by 522,000 between October to December 2019 and the same period last year. Remarkably, 94.4 per cent of this change was among the over-fifties, with professional occupations the single biggest contributor. The number of 16 to 19-year-olds recorded as economically inactive, by contrast, is back to similar levels as before the pandemic.

The ‘economically inactive’ are not quite the same thing as Neets – they are a group which is not looking for employment, or claiming unemployment benefits. They are people who have decided voluntarily to remove themselves from the labour market, and are therefore a subset of the Neet population.

Why are they inactive? The ONS has elicited that ‘retirement’ was the reason for people moving into economic inactivity in 47 per cent of cases. It is not hard to guess why so many have decided to bring forward plans for retirement: thrown into lockdown and working from home, they gained a taste for retirement and perhaps realised, too, that they could get by on less money than they might previously have imagined. When the time came to return to the office or other workplace they opted for a life of leisure instead. Moreover, investments have done rather well over the course of the pandemic – at least until the war in Ukraine. It has been easier to contemplate early retirement than perhaps it was following the 2008/09 crisis.

Interestingly, one of the victims of the pandemic has been the previously strong growth in self-employment. The number of people in salaried employment, at 29.7 million, is at a record high, although overall employment is still down on pre-pandemic levels. The gig economy seems, for now at least, to have stalled.