5 - Demography and unemployment

Summary

Summary

Large cohorts of young people exacerbated already high unemployment in the late 1970s and early 1980s. Numbers have also been boosted by the increased employment participation of women, notably by mothers of young children.

In contrast, male employment rates fell substantially as, to a lesser extent, did those of lone parents. Older men were the worst affected. The economic inactivity rates for men aged 50-59 quadrupled, and rose to 57% among 60 to 64 year olds.

Even so, unemployment rates remained highest among young people and fell much less quickly than among other groups during periods of economic recovery. Unemployment among ethnic minority groups also fell comparatively slowly.

Whereas Chapter 4 was primarily concerned with changes in labour demand that have contributed to variations in the unemployed caseload, the focus in this chapter is on labour supply. It appears that, at certain points over the last 30 years, simple changes in demography have conspired to exacerbate the mismatch between the demand for and supply of labour.

Table 5.1 reveals that the working-age population grew by 13% between 1971 and 1998. Moreover, the growth in the number of people in the early part of their prime working years (namely between 30 and 44 years of age) was, at 36%, very much greater. The passage of this cohort through the labour market exacerbated the problems created by the downturn of the 1980s, since a subset of this cohort would have been aged 15-19 in 1981 when the recession began to bite. Table 5.1 confirms this, showing that the number of people in this age range increased by 23% between 1971 and 1981, while the number aged 20-29 increased by just 2%. Clearly a large cohort of new labour market entrants is likely to be much at risk of unemployment, even in the absence of a downturn in the economy, such as that which occurred in the 1980s.

Large cohorts also tend to pose significant constraints on the chances of career progression and wage growth through promotion for members of the cohort and those cohorts that follow later. This labour market cohort has, therefore, been doubly disadvantaged, and may face further difficulties in the immediate future, as large numbers of people approach the labour market vulnerability associated with late working life.