November 2017

Labour Market Bulletin

Labour Market Participation

Table 5 labour market participation

Source: APS

Economic activity is a measure of labour participation and remains an important driver for the future supply of labour available locally. Economic activity includes those of working-age that are both employed and unemployed. Table 5 summarises the latest changes in labour participation and shows that 81% of Warwickshire’s population is actively engaged in the labour market – comfortably exceeding regional and national averages of 76% and 78% respectively.

At district and borough level, North Warwickshire enjoys the highest economic activity rate of 86%, where the proportion of working-age population actively engaging in the labour market has grown by 6% from last year. In contrast, Nuneaton and Bedworth currently has the lowest rate of 77.6% but is picking up from a long-term post-recession drop in economic activity. The number of working-age residents who are economically active has increased nine times faster than the county-wide average and overtakes all other areas. This suggests that the labour supply is increasing overall, which is good news for the labour market if the demand is met.

Why is there a high labour market participation rate and what are the wider benefits?

A high labour market participation rate may be driven by demographic changes and/or job demand. High workplace earnings offered by employers to attract skilled workers may act as incentive to rejoin the workforce. Alternatively, economic inactivity rates are contributed mostly by changes in the proportion of full-time students, residents aged 65+ and females. Changing preferences towards childcare, higher education participation and retirement can also alter the labour participation rate.

The benefit of a high labour participation ratio is that there is a larger supply of labour available locally, benefiting businesses and the wider economy. The long-term unemployed (including out-of-work benefit claimants) who are encouraged back into work can help boost household incomes across the wealth distribution. This increases disposable incomes and overall fuels improvements in business revenues, living standards and economic wellbeing. A growing labour force participation rate is good for Warwickshire, given a rising ageing population; and reflects a highly skilled population.

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