The Retirement Newsletter: I am not “economically inactive” — I am retired!
Issue Number: -46 — Are the retired “economically inactive”?
Welcome
Welcome to issue number -46, where I wonder if I will become "economically inactive" when I retire.
At the start of this week’s newsletter, the image could be viewed as the "economically inactive" — that is, the person is not doing any work and is sitting on their money and not spending it. Just reading a newspaper — which they will have bought, so there is some economic activity.
Are retirees “economically inactive”?
The Office for National Statistics in the UK defines “economically inactive” as:
“People not in employment who have not been seeking work within the last 4 weeks and/or are unable to start work within the next 2 weeks.”
So, by that measure, the retired are “economically inactive” — but are they?
They will not have been in employment in the last four weeks, and while they could start work in the next two, they don’t want to.
Will I be ’economically inactive’ in 46 weeks?
The “economically inactive”
COVID-19 has a lot to answer for — it has killed millions of people worldwide and caused long-term health issues for millions of people. And we still don’t fully understand the long-term impact of COVID-19 on a person’s health.
There is increasing evidence that the virus causes damage to a number of organs in the body (Increased rates of organ damage are seen in people discharged from hospital after COVID-19 and COVID-19: Long-term effects). It is unclear if the organs can recover from this damage.
It is suspected that this “long-COVID” might contribute to the increased levels of long-term sickness in the labour force (Half a million more people are out of the labour force because of long-term sickness). The UK government is considering how it can get the long-term sick, and therefore the “economically inactive” back into work (Jeremy Hunt says focus on the ‘economically inactive’. I say he is scapegoating the sick — Frances Ryan, Chancellor Jeremy Hunt's speech at Bloomberg, The long battle to get Britain’s lost employees back to work and The fight to get Britain’s lost employees fit and working again). And:
“Total employment is nearly 300,000 people lower than pre-pandemic with around one fifth of working-age adults economically inactive.” — Chancellor Jeremy Hunt's speech at Bloomberg, 27 January 2023
So, where have all the workers gone? Who are the millions of people not working in the UK (Unemployment: Who are the millions of Britons not working?)?
There have also been two other impacts of COVID-19; one is the change in people’s working habits, and the other is a change in people’s view of the importance of their work-life balance. I know that both of these have changed for me.
Before COVID-19, or as I now call it, BC, I went to my office and lab five or six days a week. Now, after COVID-19 (AC — and I am not suggesting that COVID-19 is over, it is not; it’s just that we are after the arrival of COVID-19), I go into my office when needed. That is, I go in when I need to do some teaching, or I am needed for a meeting that we can’t hold online. The rest of the time, I work from home and get far more work done than I would in my office. Plus, I save two hours of commuting daily, which is good for the planet.
The change in people’s working habits is hitting the economy. People are not travelling to work, buying sandwiches from nearby shops, or going out for drinks and a meal post-work. That may appear as “economic inactivity” where they have their place of work, but they will still spend money locally near their home, which may benefit their town.
The second impact of COVID-19 on the economy is that people are reevaluating their work-life balance. Some people are quiet quitting, and that appears to be true in academia (Fed up and burnt out: ‘quiet quitting’ hits academia), and others are taking early retirement (Reasons for workers aged over 50 years leaving employment since the start of the coronavirus pandemic: wave 2). People are leaving the workforce (Why are so many people leaving the workforce amid a UK cost of living crisis? — Richard Partington), and the UK government wants them back in work (UK government looks to lure early retirees back to work).
For me, COVID-19 made me reevaluate my work-life balance. I have found that this approach to working has improved my work-life balance. But it has also made me even more determined to retire early.
Are retirees “economically inactive”?
I don’t like the term "economically inactive" – I find it insulting, as everyone is "economically active”. You may not be employed as you have long-term health issues or may be retired, but you are not “economically inactive” as everyone spends money, which drives the economy. You are only “economically inactive” when you are dead. And even then, you may still have some economic impact.
In retirement, people are far from “economically inactive”.
If you look around any town centre during a weekday, the people you see are the ‘economically inactive’; that is, most of them are not employed — unless they are workers who are not working from home and are out getting a sandwich. You will see the retired, the students and the mums (or fathers) with young kids. All these people will be shopping, buying things, spending money, and being “economically active”.
Also, there is a huge industry around retirement — more economic activity. Think of the large companies, such as SAGA etc., that cater to the retiree market. That is a lot of economic activity. What more could you want? The retired are out spending their hard-saved pensions.
Plus, if they have a private pension, the retired will be paying taxes to the government as they take their pension — resulting in more economic activity.
Finally, during my retirement, I won’t be "economically inactive" I will be out spending my pension income (economic activity) and working on my side-hustles (more economic activity). And the side-hustles will generate income, and I will pay taxes on my pension and side-hustles. So, while I may not be traditionally employed in retirement, I certainly won’t be "economically inactive”.
Next week
Next week, in issue -45, I will be thinking some more about how I will not be “economically inactive” in my retirement.
Thanks
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Until next time,
Nick
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