Long Covid 'not main cause' of shrinking Scots labour force

The number of people who are economically inactive in Scotland - meaning they are out of work but not seeking a job - increased by 35,000 to 808,000 in the 12 months to March 2022, compared to 2019 levels.

Professor Steve Fothergill, an economist and expert in incapacity benefits and hidden unemployment from Sheffield Hallam University, said he was "sceptical" that the condition was a major factor.

Giving evidence to Holyrood's Covid-19 Recovery Committee, he stressed that it was "not a new phenomenon" for large numbers of people in the UK to be out of the labour market due to long-term sickness.

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He said: "What the pandemic has actually done is really only tweak that phenomenon a little bit higher.

"We have had in the UK as a whole something like 2.5 million adults of working age out of the labour market on incapacity-related benefits since the beginning of this century.

"It wasn't aways at that level - at the end of the 1970s we only had about three quarters of a million out of the labour market on these benefits.

"But there was a major shift in the 1980s and 90s and the numbers have really stayed very high since, fell away a little, and have come back up by a couple of hundred thousand or so during the pandemic...

"Yes, Long Covid may contribute to the modest increases that we've seen during and after the pandemic [but] there's been evidence from the Institute for Fiscal Studies on Long Covid which suggests that those people who are suffering from it are not so much moving into economic inactivity as still in work, but on the sick for the moment."

Professor Steve Fothergill, Centre for Regional Economic and Social Research, Sheffield Hallam University (Image: Scottish Parliament TV)

David Freeman, head of labour market and households for the Office for National Statistics (ONS) said their own investigations into where people with Long Covid were in the labour market found that they accounted for five per cent of people who were economically inactive compared to 3.5% of the unemployed, 3.3% of those in work, 2.9% of retired people and 1.7% of students.

He added: "That does seem to back up that while long Covid might be contributing to increasing inactivity there are people with long Covid who are doing other things in the labour market - still working, maybe on sick leave, or actually out there looking for work that will fit around their symptoms."

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An estimated 175,000 people in Scotland are believed to be experiencing Long Covid, where it is defined as symptoms ongoing more than four weeks after onset. This can range from debilitating fatigue and breathlessness to joint pain.

Sufferers are more likely to have a pre-existing condition, be female, poor, or middle-aged.

Louise Murphy, an economist with think tank the Resolution Foundation, said Long Covid was "part of the story but definitely not all of it".

She said: "We're also seeing increases in people noting cardiovascular problems, and mental health problems, which is a continuation of longer term trends.

"There's also some indication now that NHS waiting lists and long waits for treatment are having an impact.

"There's been recent work by the ONS showing that people who are over 50 who have left the workforce, when asked, just under a fifth - 18% - said they are on an NHS waiting list, which is higher than those who remain in work."

Ms Murphy added that the number of men aged 18 to 24 who are economically inactive due to mental health problems such as depression or anxiety has doubled since 2006, pre-dating the pandemic, although there had also been a "gradual increase" since 2020.

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Panellists cautioned that it was likely that no more than 30% of those currently on sickness and disability benefits for all conditions would be able to rejoin the labour force.

They also stressed that some over-50s had "drifted" from furlough into retirement and did not want or need to go back to work.

"The reality is, especially for older people, if you're in your mid-60s, you were furloughed, you've now retired early, the majority of these people own their homes outright or they're in a fairly okay financial situation," said Ms Murphy.

"I think there's little to nothing the Government could do to encourage these people back to work."

Tony Wilson, director of the Institute for Employment Studies (Image: Scottish Parliament TV)

Tony Wilson, director of the Institute for Employment Studies, added: "A lot of people have simply drifted into economic inactivity following furlough, and then it's very hard to get people back...We are seeing really clearly in the data people moving from furlough and becoming longer and longer economically inactive, in particular with the growth of people saying they've retired which has primarily been a post-furlough phenomenon rather than a post-pandemic one."

He stressed that the UK is one of the few developed economies - with the exception of the US, Latvia, Switzerland and Iceland - where employment is lower now than it was before the pandemic and that people with chronic conditions may feel nervous about coming back "when there is still a pandemic and very little protective measures taken in workplaces where people might be vulnerable to the virus".

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However, MSPs also heard that the drop off in employment was mainly driven by a decline in self-employed working, rather than employees in the workforce.

Mr Freeman added that ONS analysis found that while the total number of hours being worked in the UK economy is down slightly due to a dip in employment, there is "no evidence" that the average number of hours worked has fallen - contrary to claims that people are seeking more of a work-life balance.

Part-time working "has actually not increased", he added.

MSPs were told that this was partly explained "mainly explained by far fewer women working part-time as employees than they were before the pandemic", including a fall in the number of single parents in work for the first time in 30 years, but also possibly due to an increase in flexible working - such as working-from-home - since the pandemic.