Labour Market Outlook· Labour market Labour Market Outlook Q3 2022 6 October 2022 Charlie McCurdy In the aftermath of the pandemic, the emergence of long Covid has increased focus on the relationship between work and ill health. But the prevalence of long Covid, thought to affect around 1 million workers, is lower than the pre-pandemic increase in the number of working-age disabled people (up by 2.3 million since 2013), with most of that (1.9 million) driven by those in employment. More than half of the increase in disabled people in employment has been driven by an increase in disability, rather than an increase in the disabled employment rate. So, the worsening reported health of the working-age population was a big issue well before the pandemic. Despite fast rising employment, the employment rate for disabled workers (54 per cent) remains low: 28 percentage points lower than the non-disabled population. Increases in the employment rate for disabled groups with traditionally low employment, rather than any compositional changes to the disabled population, has driven the overall rise in the employment rate for disabled people. For example, there are three times more disabled workers reporting a mental health illness in 2022 (up to 1.1 million people) than there were in 2013, which is equivalent to 3 per cent of the overall working-age population. It is difficult to disentangle whether rising employment for disabled people reflects a genuine removal of barriers to work for disabled people – something we should welcome – or a rise in self-reported disability among workers. Nonetheless, there is an increased need to refocus political energy on supporting disabled people into the workforce, paying particular attention to the retention of workers with a disability and the increase in the number of workers with mental health problems. Our ‘Lifting the Lid’ section explores the recovery in local labour markets, the latest picture on the number of EU workers in the UK and the share of employees with multiple jobs. The rise in employment of the disabled population In the aftermath of the pandemic attention has turned to the rise of ill health in the labour market. Long Covid, despite being a relatively recent phenomenon, appears to be associated with poor labour market outcomes for those that suffer from it.< More ill health in the labour market means that firms are thinking about how to support workers with long-term health conditions. This is, however, part of a much broader debate that existed prior to the onset of Covid-19, specifically the number of people in work who report having a disability. The definition of disabled refers to a broader population than the number of people with long Covid. Disability – as defined by the Equality Act (EA) of 2010 which superseded the Disability Discrimination Act (DDA) – refers to a health problem that last 12 months or is likely to last the rest of a person’s life and limits the ability to carry out day-to-day activities either a lot or a little..Self-reported long Covid officially means that someone experiences symptoms more than 4 weeks after first testing positive for Covid-19. Results from the UK COVID-19 Infection Survey shows that long Covid symptoms adversely affect the day-to-day activities of around three-quarters of people with self-reported long Covid. Still, the share of workers over 16 with a disability (16 per cent) is considerably larger than current estimates of the share of workers with long Covid (3 per cent). And while long Covid is still a new illness, with little known about how long it lasts, it seems plausible that it could one day be classified as a disability itself. So, in this spotlight we focus on the broader and longer-term issue of the world of work for those with a disability. This is important because there has been a large increase in the number of working-age disabled people (up 2.3 million), with most of that driven by those in employment (1.9 million). Over half the increase in the number of disabled people in employment has been driven by more people with a disability, as opposed to an increase in the disability employment rate. The result, as shown in Figure 1, is that the share of the working-age employed population with a disability has grown from around 10 to 15 per cent between 2013 and 2022. Figure 1: Disability in the workforce features more heavily now than in the past Higher employment among the disabled is a long-standing policy objective for the UK government: the UK government set a goal in 2017 to see a million more disabled people in work by 2027, a goal which has been met five years early. Despite there being more disabled people in work, the difference between the employment rate of the disabled (54 per cent) and non-disabled (82 per cent) population is large, around 28 percentage points (as shown in Figure 2). What’s less clear is whether this is a positive or negative trend: it could reflect a worrying rise in the incidence of self-reported disability among workers or a genuine removal of barriers to work for disabled people. Figure 2: Despite more disabled people in work, the disability employment rate gap remains large Mental health problems now affect a larger proportion of disabled workers A key question is how much of the increase in employment for the disabled population is being driven by an overall larger disabled population or by an increase in employment rates for disabled people. As the right-hand panel of Figure 3 shows, there has been a significant increase in the proportion of working-age people reporting they have a disability (up five percentage points between 2013 and 2022). We can also observe that only mental health illnesses and ‘other’ health problems (which likely reflects reporting of Covid-19) have seen an increase in the share that they contribute to the overall disabled population since 2013. On the flipside, the share of the working-age disabled population accounted for by those with physical conditions has fallen by 10 percentage points over the same time period. Figure 3: Mental health problems now affect a larger proportion of disabled workers The left-hand panel of Figure 3 highlights that employment rates among almost all disabled groups (bar those with speech impediments) have risen. Most strikingly, the employment rates for those with depression and other mental illnesses, traditionally low employment rate groups, have surged – an increase of 21 and 13 percentage points respectively. Increases in the employment rate for different types of disability – particularly depression – has driven up the employment rate of disabled people There has been a shift in the composition of the disabled population towards health problems with lower employment rates. However, ‘within group’ increases in employment rates particularly for people with mental illnesses (particularly depression and anxiety) and to a lesser extent physical difficulty have more than offset this, meaning the employment rate has instead risen by around 10 percentage points. Figure 4: Increases in the employment rate for different types of disability – particularly depression – has driven up the overall employment rate of disabled people Depression and other mental illnesses have played an especially large role in the rise of employment for disabled people The analysis presented in Figure 3 and 4 looked at employment rates for people with disabilities by different types of health problems. Here, we flip to focus on absolute employment changes for people with disabilities by different health problems. Figure 5 shows that the number of disabled workers reporting a mental health issue has tripled since 2013, up to 1.1 million workers in 2022 (equivalent to 3 per cent of the total working-age population). Over the same period, the number of workers reporting physical problems (back, neck, arms, hands, legs or feet) has only increased by 12 per cent. Despite this large increase in the number of workers with mental health conditions there are still around 1.2 million disabled workers (27 per cent) whose main health condition is physical. Increases in the numbers of disabled workers with a mental health condition could be explained by increased awareness and more self-reporting in the LFS. But other sources such as the General Health Questionnaire (GHQ), which is generally viewed as more robust than the self-reporting of disability, show that this rise in mental illnesses for workers is a genuine long-term trend. Figure 5: The number of disabled workers reporting a mental health issue has tripled since 2013 Previous Resolution Foundation work found that young people are substantially more likely to have a mental health problem than a decade ago, something which was exaggerated by the onset of the Coronavirus crisis. More disabled people in work has also led to a rise in the number of workers in receipt of disability benefits, driven most recently by the young and those with mental health conditions. Despite fast rising employment for the disabled population, much more is needed to support people with disabilities in the labour market Overall, then, the current focus on the labour market outcomes for suffers of long Covid is clearly important, but this Spotlight reminds us that we should not forget about the longer-term growth in the employment of people with disabilities. The political energy that existed prior to Covid-19 needs to return to this important and increasingly endemic labour market issue. The first policy conclusion, then, given that the disability employment rate gap remains high, notwithstanding recent improvements, is that there is a continuing need to encourage disabled people into the workforce. Complementary to this, there is a greater need for employers to support their disabled workers when it comes to employment exits, improving support when in work, reforming sickness absence, expanding support to re-enter work and enhancing work incentives. Finally, there are broader questions about why mental health for the working-age population appears to have worsened so quickly and by so much, and what can be done to reverse this.  For example, Bank of England research shows that inactivity due to long-term sickness has remained persistently higher than pre-pandemic levels and that the rate of participation for someone with a long-term health conditions is lower than the rest of the population.  Research from the Institute for Fiscal Studies highlights that as much as one-in-ten long COVID sufferers are likely to be out of work. It is thought to affect 1 million workers over the age of 16.  The definition of disabled also refers to a larger population than the number of people economically inactive because of long-term sickness, but there is significant overlap. Of the 2.3 million working-age people who identified as long-term sick in the first quarter of 2022, 97 per cent were also classified as disabled. Disability is broader than this measure of long-term sickness and includes those who are employed (4.8 million working-age), unemployed (340,000 working age) and the economically inactive who classify as disabled but not long-term sick (1.6 million working age).  The analysis presented throughout this Spotlight uses this official definition of disability from the Labour Force Survey (LFS).  Mental health conditions include depression, bad nerves, anxiety, mental illness or nervous disorders. Physical conditions include problems or disabilities connected with the arms, hands, legs, feet, back or neck.  Looking over the same time period as Figure 5 using the GHQ we can observe that mental health conditions have risen by 22 per cent for the working-age population. This is still a substantial rise but a significantly smaller rise than what we observe in the LFS. The GHQ measure of mental health conditions is, however, different to the LFS definition we use here as it is not restricted to the disabled population and uses a threshold for mental health conditions. The larger increase in the LFS might reflect substantial underestimates in previous years of the survey because of stigma attached the illness or a lack of awareness.