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It provides a comprehensive analysis of the city’s economy as we emerge from a period of high inflation and local, regional, and national elections, and actionable measures businesses and stakeholders from across the city-region can take to drive economic growth.
Read the full Birmingham Economic Review 2024.
At the start of 2024, the United Kingdom reached a troubling milestone: the number of economically inactive people—those who are neither working nor actively seeking employment—rose to its highest level since 2012.
This surge in inactivity is a significant concern for policymakers as it directly impacts labour supply and economic growth. Among the areas most affected by this trend is the West Midlands, particularly its metropolitan area, which stands out for its high levels of economic inactivity compared to other regions in England.
In this blog post, Darja Reuschke and Donald Houston explore the underlying causes of economic inactivity in the West Midlands, examine the gender disparities that exacerbate the issue, and discuss the potential policy implications for addressing these challenges.
A Worsening Trend in the West Midlands Metropolitan Area
Before the pandemic, the economic inactivity rate in the West Midlands metropolitan area was already one of the highest in the country. In the first quarter of 2019, around 26.4% of people aged 16-64 in this region were economically inactive. Fast forward to the first quarter of 2024, and that figure has risen to 27.3%. Only Tyne and Wear (Newcastle) has a higher rate of inactivity at the beginning of 2024, with 27.8%. This increase, while concerning, is not uniform across the region. Interestingly, other parts of the West Midlands, excluding the metropolitan area, have seen a decline in inactivity, with the rate dropping to 16.4%, the lowest in England. This stark contrast highlights the unevenness of the economic inactivity trend within the West Midlands.
Reasons Behind the Increase in Economic Inactivity
One of the key drivers of economic inactivity in the UK, and in the West Midlands specifically, is long-term illness. In early 2024, around 7% of people aged 16-64 reported being inactive due to long-term sickness. This reflects a wider trend across England, where 30.1% of economically inactive individuals cited sickness or disability as the main reason for their inactivity.
However, sickness is not the only reason for economic inactivity. In fact, the second most common reason across the country is “studying,” which accounts for 28.9% of inactivity. In the West Midlands metropolitan area, a notable proportion of inactivity is also attributed to studying, with 35.3% of inactive individuals in this region reporting it as the primary reason. While the sickness rate of 31.6% is close to the national average, it is important to highlight that long-term illness has risen significantly as a reason for inactivity in this region, particularly since 2019.
A closer examination reveals that the increase in sickness-related inactivity in the West Midlands metropolitan area has been far more pronounced than in other regions. From 2019 to 2024, the percentage of people citing sickness as the reason for inactivity rose by 9.8 percentage points in the West Midlands metropolitan area—substantially higher than the national average increase of 6 percentage points.
The Gender Inactivity Gap
Economic inactivity is not just a matter of geography; it is also deeply shaped by gender. Historically, women have had higher rates of inactivity compared to men, although this gap has narrowed in recent decades. As of the first quarter of 2024, the national gender gap in economic activity in England was 6.1%. However, the West Midlands metropolitan area stands out for both its high level of inactivity among women and the significant gap between men’s and women’s inactivity rates. In this area, 32.7% of women were economically inactive, compared to just 21.7% of men. This marks an 11 percentage point gap in the region, much higher than the national gender gap.
The reasons behind this high inactivity rate among women in the West Midlands are multifaceted. A significant proportion of women (39%) report being inactive due to looking after home or family, while 33% cite sickness. This contrasts with men in the same age group, for whom sickness is the predominant reason for inactivity. For men aged 25-64 in the West Midlands metropolitan area, 59% of inactivity is due to illness.
Notably, the increase in sickness as a reason for inactivity has been sharp for both men and women. Among men, the percentage citing sickness rose from 45% in 2019 to 59% in 2024, while among women, it increased from 23% to 33% over the same period. This uptick in sickness-related inactivity underscores the growing importance of addressing health issues among working-age individuals in the region.
Addressing the Regional Disparities
The growing economic inactivity in the West Midlands metropolitan area, driven by rising illness and disability, is a challenge that demands urgent attention. The disparity between the metropolitan area and the rest of the region is particularly stark. While the broader West Midlands has seen a decrease in inactivity, the metropolitan area has experienced a troubling rise. The region’s high levels of economic inactivity also stand out in comparison to other metropolitan areas in England, raising concerns about the long-term economic implications.
Policy Implications and Solutions
To address the rising levels of economic inactivity in the West Midlands, especially in light of the significant increase in illness-related inactivity, policymakers must adopt an integrated approach. Employment and health policies need to work hand-in-hand to reduce the impact of long-term sickness and disability on the labor force. This could involve improving access to healthcare services, offering better support for those with chronic health conditions, and creating more inclusive workplace environments that can accommodate people with disabilities.
Additionally, the gender disparities in economic inactivity should be a focal point of policy efforts. Tailoring policies to support women, particularly those who are inactive due to caregiving responsibilities, could help reduce the gender inactivity gap. Policies that provide better access to affordable childcare, as well as flexible working arrangements, could play a crucial role in supporting women’s participation in the workforce.
Finally, there is a need to further explore the intersectionality of economic inactivity, considering factors such as ethnicity and age. In the West Midlands metropolitan area, the inactivity gap between men and women, as well as the overall level of inactivity, warrants targeted interventions to ensure that no group is left behind in the pursuit of economic recovery.
Conclusion
The rise in economic inactivity in the West Midlands metropolitan area, fueled by long-term illness and gender disparities, poses a significant challenge to the region’s labor market and economic future. While this trend is not unique to the West Midlands, the severity of the rise in inactivity calls for immediate policy action. By addressing the root causes of economic inactivity—particularly health-related issues and gender inequality—through integrated employment and health policies, the West Midlands can work toward a more inclusive and sustainable workforce.
Read the full Birmingham Economic Review.
This blog was written by Dr Darja Reuschke, Associate Professor and Donald Houston, Professor of Regional Economic Development at City-REDI, University of Birmingham.
Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI / WMREDI or the University of Birmingham.