NEET economic inactivity rate lowest on record
Not only has there been a fall in young adult NEETS, the inactivity rate is at its lowest on record
Official figures released by the ONS last month show that there are now just under a million (975,000) young people who are not in education, employment or training (NEET) in England, equivalent to 13.5% of all 16-24-year-olds. This is 118,000 less than the previous year (a fall of 10%). Behind this headline statistic, however, there is something more interesting going on. The proportion of young adults that are NEET and not seeking work (economically inactive) is the lowest on record. Accordingly, the composition of NEETs in 2014 is very different than it was ten years ago – while a decade ago around 60 per cent of NEETs were economically inactive this has now dropped to under 50 per cent.
A NEET is a young person (aged 16-24) who is "Not in Education, Employment, or Training". NEETs can be broken down into two categories: those who are unemployed and those who are economically inactive. The former covers young people who have been actively seeking work within the last four weeks and are available to start work in the next two. Economic inactivity covers those either not looking or not available for work. The graph below show the proportion of the young adult population that are NEET unemployed and NEET economically inactive in the first quarters of 2002-2014.
It shows that since its peak of around 16 per cent (1.2 million) in 2012 the NEETs rate has fallen for two consecutive years. It also shows how its rise and subsequent fall has been driven by unemployment. Before the recession NEET unemployment remained below 6 per cent, it rose to 8 per cent in 2009 and almost reached 9 per cent in 2012. The latest data show it has fallen to 7 per cent and if the current trend continues the rate is likely to be back at its pre-recession levels within the next year.
The inactivity rate has also fallen for the last two years and now stands at 6.5 per cent of the young adult population (468,000 people). But unlike unemployment, this trend has been much more consistent. Looking further back, while the rate of unemployed NEETs was on the rise, the NEET economic inactivity rate was falling. As a result, this rate is the lowest it’s ever been. There has also been a change in the composition of NEETs. While in 2004, almost 60 per cent of NEETs were economically active, the latest data shows this has dropped to under half.
So what’s driving this shift? Data from the Labour Force Survey indicates that the fall in economically inactive NEETs between 2012 and 2013 was entirely on account of falling numbers of NEETs that were looking after the family or home. It’s likely that this fall is due to a combination of social and economic factors. For instance, the fall could be on account of more young people looking after families entering the labour force, the conditionality following limitations to eligibility for income support for lone parents with children over 5 or simply that there are fewer young families. There is certainly evidence to support the latter: in 2012, the under-18 conception rate was the lowest since 1969.
There has been a significant fall in the number of NEETs in recent years. In the short term, this is because NEET unemployment fell, although it is still quite high. But in the longer term, inactivity has fallen to its lowest levels on record. This is mainly due to fewer younger people looking after families. A mix of economic and social factors seem to be driving this – with falls in teenage pregnancies likely to be a key factor. As such, there are less NEETs not seeking work than ever before.