Inactivity rates are increasing around the world, while the global population and labour force are ageing. But the inactivity rate is an aggregate measure overlooking the different profiles of people outside the labour force. This new Spotlight on Work Statistics explores the characteristics of the potential labour force, made up of persons outside the labour force with an attachment to the labour market.
Demographic shifts leading to the ageing of the world’s population combined with social, educational and economic changes are resulting in increasing inactivity rates. Societies and economies need to act appropriately to face the challenges posed by rising inactivity rates and an ageing labour force, paying special attention to seniors and youth. Societal gender roles still play an important role in men’s and women’s labour force participation. Indeed, there is still a strong gender pattern of inactivity rates whereby women are significantly more likely to be outside the labour force than men.
Although increasing inactivity rates can be a cause for concern, it is wrong to assume that all persons outside the labour force are inactive or that they keep no ties to the labour market. Indeed, among persons outside the labour force there are some who belong to the potential labour force: the available potential jobseekers and the unavailable jobseekers. The potential labour force represents a group of people who, despite not being in the labour force, are still putting pressure on the labour market in one way or another, and could potentially join the labour force in the near future.
In some countries around the world, the potential labour force is close in numbers to the unemployed. Where persons in the potential labour force and especially discouraged jobseekers are numerous, policymakers should keep it in mind when designing employment promotion programmes. Focussing only on the unemployed may lead to a gross underestimation of the need for job creation.
Although two different groups of people make up the potential labour force, one of them is much more prominent in most countries: available potential jobseekers. Thus, issues related to job-search discouragement, inappropriate infrastructure for job searching, or insufficient employment office services seem to be more common than hindrances to becoming available to take up a job (or those who face hindrances to availability for employment are not looking for a job).
Therefore, programmes to promote job creation, facilitate the job search process and help potential employers reach potential workers can have a great impact not only on employment rates, but also on labour force participation.
Chosen excerpts by Job Market Monitor. Read the whole story at Persons outside the labour force: How inactive are they really? Delving into the potential labour force with ILO harmonized estimates