Pandemic triggers dramatic rise in people leaving the jobs market in rural county areas

Over 100,000 people have taken the ‘lifestyle choice’ of early retirement in England’s county areas during the pandemic, contributing to hundreds of thousands of people leaving the jobs market over the last three years.

Council leaders are calling for extra powers over employment and skills to be devolved to their areas to help encourage these ‘missing’ workers back into employment as new analysis from the County Councils Network (CCN) reveals that over 320,000 more people have become economically inactive in England’s 36 county areas compared to the outbreak of Coronavirus in March 2020.

The findings come in a new CCN Analysis report, which analyses Office of National Statistics’ Annual Population Survey dataset for March 2020 and September 2022 to ascertain where, and for what reason, people have left the employment market pre and post pandemic. The analysis includes local authority type, regional and CCN member council level data.

Download the report here.

The report shows that just over 100,00 of these people are early retirees, particularly those aged between 50 and 64, which is over two-thirds of England’s entire increase in those retiring early. There has also been a sharp rise in long-term sickness in counties where 70,000 more people are now economically inactive for this reason, which is over half of the country’s increase.

The data suggests that people have made different lifestyle choices since the start of the pandemic, such as choosing to retire early during the three national lockdowns.

With over 3m people now economically inactive in county areas – one in five workers – county leaders warn that this issue is contributing to the labour crisis where there are not enough workers for the number of jobs available, hampering local growth and productivity at a time when they ‘desperately need local economies to be dynamic and thriving’.

For the first time, the CCN has analysed where in England people have left the employment market between March 2020 and September 2022:

• The number of economically inactive people in England has grown from 7m to 7.243m, largely as a result of a 12% (320,300) increase in the number of economically inactive people in England’s 36 county and rural areas – squeezing local labour supply.
• In contrast, major cities and towns across the country saw a decrease in economically inactive people, with London seeing a drop of 20,100 people and the eight largest ‘core cities’ in England which collectively saw a drop of 26,500 people. Metropolitan boroughs, which cover areas in the North and West Midlands, 17,000 fewer people becoming economically inactive.
• In total, 100,300 extra people took the lifestyle choice of early retirement in county areas compared to pre-pandemic levels, a 21% increase over the 36 months. This trend is up in all areas of England but has risen the steepest in counties – over four times the total amount of councils in London and metropolitan borough areas which are located in cities and towns in the North and West Midlands.
• Some 56% of all those who have retired early are now in county areas, up from 54% from March 2020. Approximately 1 in 25 working age adults in counties are now retired early. This compares to 1 in 35 in metropolitan boroughs and 1 in 63 in London now retired early.
• The number of people on long-term sick in county and rural areas has increased 10% – 70,000 people – significantly more than the total for the council areas covering rest of England. The bulk of the remainder of the rise in economically inactive people in counties is attributable to an increase in students (+181,800).
• The East Midlands has seen the largest increase of people become economically inactive since the start of the pandemic (+10.4% and 60,400 people), including the highest increase of early retirees (+31.3%) and the highest rise in long-term sick (+16.6). The South East had the second largest increase (+9.7% and 93,500 people) and the North West the third highest (+6.7% and 70,700 people).

The CCN says that devolved powers in skills and employment, as well as a greater influence over economic growth, is vital to addressing these issues and incentivising or enabling individuals back to work.

So far the government has agreed devolution deals with seven county areas, which have included devolved adult education budgets and powers. But with 29 county areas in England still without access to these powers, CCN is urging the government to agree build on this head of steam and agree deals with as many county areas as possible in 2023.

Cllr Tim Oliver, Chairman of the County Councils Network, said:

“The number of working age people not seeking employment has been an issue for a number of years, with this trend accelerated by the pandemic. But today’s data shows that county and rural areas have seen a dramatic rise and account for the vast majority of new ‘missing’ workers since March 2020.

“A significant proportion of this rise is attributable to an increase in students who are the workers and innovators of tomorrow. But there has also been sharp rise in the lifestyle choice of early retirement, as well as an increase in long-term sickness, taking 170,000 people out of the employment market in county areas. At a time when we desperately need our local economies to be dynamic and thriving, having a labour shortage impacts on growth and prolongs recession.

“Therefore, we need more ways to encourage early retirees back into the labour market and to support people who are on long-term sick to come back into employment. But this should be locally led; what could work in Durham could be different in Devon. The deals negotiated with seven county areas in 2022 could be transformative – and we urge the government to build on this momentum and agree further deals with as many local leaders as possible in 2023.”