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Chapter 5 - Changes experienced between Wave One and Wave Two

Released: 15 November 2012 Download PDF

Chapter 5 – Changes in Economic Activity and Income

This data was revised on April 10th 2014

This chapter explores changes in economic activity and income experienced by adults between Wave One and Wave Two. Comparisons are made between four groups of adults, as described below:

  • Adults who had at least one impairment at Wave One and at Wave Two are ‘adults with impairment at both waves’.

  • Adults who had at least one impairment at Wave One but no impairments at Wave Two are ‘offset adults’.

  • Adults who did not have any impairment at Wave One but had at least one impairment at Wave Two are ‘onset-acquired adults’.

  • Adults who did not have any impairment at Wave One and at Wave Two are ‘adults without impairment at both waves’. 
     

5.1 Economic Activity Status

There are three states of economic activity: employed, unemployed, and economically inactive1. This section provides a comparison of economic activity status between Wave One and Wave Two for working age adults (16 to 64), and whether patterns of movements may be influenced by the existence of impairments, and by impairment onset or offset.

Economic activity status – Group comparisons

Most of the working age adults (16 to 64) in each of the four groups had the same economic activity status at Wave One and Wave Two. There was little movement into and out of employment (or unemployment and economic inactivity) between waves. This finding is set against a backdrop of the impact of the 2008 recession on the UK labour market, during which unemployment was higher (but stable), and employment rates were lower (but stable) compared to pre-recession figures. In general, looking at data on economic activity status, adults with impairment at both waves were different from offset and onset-acquired adults; in turn, offset and onset-acquired adults were different from adults without impairment at both waves.

Compared with other groups, adults with impairment at both waves were less likely to be employed, and more likely to be economically inactive at both waves. The reverse is true for adults without impairment at both waves – they were more likely to be employed, and less likely to be economically inactive at both waves.

Offset and onset-acquired adults showed similar patterns in their economic activity statuses between Wave One and Wave Two. However, when compared with the adults without impairment at both waves, having impairment at either wave appears to have an effect in reducing the likelihood of being employed, and increasing the likelihood of being economically inactive at both waves.

‘Tax credits’2 and ‘modified or reduced hours’ were the most-commonly cited enablers to work by adults with impairment at both waves, who had moved into employment at Wave Two after being unemployed or economically inactive at Wave One.

‘A health condition, illness or impairment’, ‘disability-related reasons’ (as reported by respondents) and ‘difficulty with transport’ were the most commonly-reported barriers to work or seeking work for adults with impairment at both waves, who moved into unemployment or economic inactivity after being employed at Wave One.

Table 5.1 shows the economic activity status of working age adults between Wave One and Wave Two, for the four groups of adults. Changes or stability of economic activity over time are shown by the percentage of those who had moved between different states of economic activity, or remained in the same state, between the two waves3.

As seen on Table 5.1, a lower percentage of adults with impairment at both waves (39%) were employed in both Wave One and Wave Two, compared with 71% of adults without impairment at both waves. A higher percentage of adults with impairment at both waves were economically inactive (45%) at both Wave One and Wave Two, compared with adults without impairment (14%) at both waves.

These findings are consistent with a large body of research showing that disabled people are disadvantaged in the labour market4. Studies have typically found that disabled people are less likely to be employed and more likely to be economically inactive than non-disabled people5. We found that adults who had impairment at both waves, rather than at just one wave (offset or onset-acquired) were more likely to be economically inactive, and less likely to be employed. Having impairment at both waves may suggest that the impairment has been experienced for longer and is more severe. LOS data showed that compared with offset and onset-acquired adults, a higher percentage of adults with impairment at both waves reported a ‘severe’ level of difficulty for the four most-commonly cited impairments6. Other research shows that the increase in duration and severity of impairment are factors underlying lower levels of employment7.

Looking at offset and onset-acquired adults, the patterns in economic activity status are similar. In these groups, between 62% and 64% were employed, and 16% to 21% were economically inactive at both Wave One and Wave Two. When compared with adults without impairment at both waves, having impairment at either wave appeared to have some effect in reducing the likelihood of being employed, and increasing the likelihood of being economically inactive at both waves. Compared with the offset and onset-acquired adults, a higher percentage of adults without impairment at both waves were employed at both Wave One and Wave Two (71%), and a lower percentage (14%) were economically inactive at both waves.

Table 5.1 Economic activity status for working age adults (16 to 64) at Wave One and Wave Two, by groups

Percentage of adults aged 16-64
     Wave two economic activity status  
Adults with impairments at both waves Employed Unemployed Inactive Total Sample size (number)
  Wave one economic activity status          
    Employed 39 1 4 44  
    Unemployed 2 3 2 7  
    Inactive 2 2 45 49  
    Total 43 6 50   2,760
     
Offset Wave two economic activity status  
      Employed Unemployed Inactive Total Sample size (number)
  Wave one economic activity status          
    Employed 62 2 3 67  
    Unemployed 3 2 2 7  
    Inactive 4 1 21 26  
    Total 69 5 26   1,730
     
Onset acquired Wave two economic activity status  
      Employed Unemployed Inactive Total Sample size (number)
  Wave one economic activity status          
    Employed 64 3 6 73  
    Unemployed 4 2 2 7  
    Inactive 2 1 16 19  
    Total 71 6 23   1,040
     
Adults with no impairments at both waves Wave two economic activity status  
      Employed Unemployed Inactive Total Sample size (number)
  Wave one economic activity status          
    Employed 71 2 3 77  
    Unemployed 2 2 1 5  
    Inactive 3 2 14 19  
    Total 76 6 18   5,650

Table source: Office for National Statistics

Table notes:

  1. Sample sizes have been rounded independently to the nearest 10.
  2. All percentages have been rounded to the nearest 1.
  3. This data was revised on April 10th 2014.

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LOS data are comparable to labour market data collected by the Labour Force Survey (LFS). Looking at the movements in economic activity status between April-June 2010 and April-June 2011 for LFS (Table 5.2), 66% of working age adults in the UK were employed at both time points according to the LFS, the comparable LOS figure being 65%, while 19% remained economically inactive. There were equal, and small amounts of movement into and out of employment (both at 5%) from April-June 2010 to April-June 20118. Generally, between 2009 and 2012, the UK labour market showed effects of the 2008/09 recession experienced by the UK economy – the employment rate9 was lower, and both the unemployment rate10 and the inactivity rate11 were higher, relative to pre-recession figures. All three measures were stable during this period, which may in part explain the stability seen in the LOS economic activity data.

Table 5.2 Economic activity status for working age adults (16 to 64) for the four groups of adults (combined) on LOS at Wave One and Wave Two, and for LFS (April - June 2010 and April - June 2011)

Percentage of working age (16-64) adults
    Wave Two economic activity status     
  Life Opportunity Survey1 Employed Unemployed Inactive Total Sample size
  Wave One economic activity status          
    Employed 65 2 4 71  
    Unemployed 2 2 1 5  
    Inactive 3 2 19 24  
    Total 70 6 24           11,180
     
Labour Force Survey April-June 2011  
      Employed Unemployed Inactive Total Sample size
  April-June 2010          
    Employed 66 2 3 70  
    Unemployed 2 3 1 6  
    Inactive 3 1 19 24  
    Total 71 6 23             4,800

Table source: Office for National Statistics

Table notes:

  1. This data was revised on April 10th 2014
  2. Sample sizes have been rounded independently to the nearest 10
  3. All percentages have been rounded to the nearest 1

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Enablers and barriers experienced by adults moving into and out of employment

For adults with impairments at both waves who moved into employment at Wave Two, ‘tax credits’12 and ‘modified hours or days or reduced work hours’ were the two most common enablers that helped them at work. However, most of the adults in all four groups did not report any enablers.

For adults with impairments at both waves who moved into unemployment or economic inactivity, the most commonly-cited barriers  were ‘a health condition, illness or impairment’, ‘difficulty with transport’, ‘difficulty getting into buildings’ and ‘anxiety/lack of confidence’.

A common barrier that restricted unemployed or economically inactive adults, across all four groups, was ‘lack of job opportunities’. Offset adults and adults without impairment at both waves also cited ‘family responsibilities’ as a barrier.

As seen on Table 5.1, a small percentage of working age adults in each group showed a change in their economic activity status between Wave One and Wave Two. Between 4% and 7% of adults from each group were either unemployed or economically inactive at Wave One, but were employed at Wave Two. Data collected at Wave Two can be used to find out the measures which helped or enabled these adults in work, as they moved into employment at Wave Two. In addition, around 5% to 9% from each group were employed at Wave One, but were unemployed or economically inactive at Wave Two. Again, Wave Two data can be used to find out what barriers restricted these adults from working or seeking work13.

Across the four groups of adults, most working age adults who moved into employment at Wave Two did not cite any enablers that helped them at work – this ranged from 58% of adults with impairment at both waves, to 86% of offset adults. The LOS Wave Three questionnaire includes questions designed to provide a greater understanding of any enablers that may have resulted in the removal of barriers to participation in particular life areas. Therefore future LOS reports based on Wave Three data should provide further insight into enablers experienced by adults moving into employment between waves.

Adults with impairment at both waves were most likely to report enablers, with 21% reporting ‘tax credits’, and 19% reporting ‘modified hours or days or reduced work hours’ as measures that helped them at work. For offset adults, onset-acquired adults, and adults without impairment at both waves, tax credits were the most commonly-cited enabler (cited by 9%, 9% and 11% of each group respectively). For working age adults who moved into unemployment or economic inactivity at Wave Two, after being employed at Wave One, ‘lack of job opportunities’ was cited as a barrier to work by just over 20% by adults with impairment at both waves, offset adults, and adults with no impairment at both waves. This is not surprising given the impact of the 2008 recession on the UK labour market during Wave One and Wave Two, as described above. ‘Family responsibilities’ was a common barrier reported by offset adults and adults without impairment at both waves (60% and 53% respectively)14. Unlike other groups, a high percentage of adults with impairment at both waves (81%) cited ‘a health condition, illness or impairment’ as a barrier to work or seeking work, while 36% cited ‘disability-related reasons’ and 25% reported ‘difficulty with transport’. 17% of this group also reported ‘anxiety/lack of confidence’ as a barrier to work or seeking work.

Notes for 5.1 Economic Activity Status

  1. See http://www.ons.gov.uk/ons/rel/lms/labour-market-guidance/interpreting-labour-market-statistics/interpreting-lm-statistics.html#tab-Labour-market-statuses for further details.
  2. A person may qualify for a tax credit if he/she works but earns low wages. See the following webpage for more information: http://www.hmrc.gov.uk/taxcredits/
  3. Not surprisingly, the majority of adults aged 65 and over were economically inactive in both Wave One and Wave Two, regardless of their impairment. This is because a large percentage of this age group are in retirement. As such, these adults were excluded from the analysis here. See reference tables for age breakdowns on economic activity status across waves.
  4. It is important to note, that most of the studies in this area of research examine people with disability, rather than impairment. Disability may be defined using the Disability Discrimination Act (DDA), and therefore is different from social model of disability applied by the LOS.
  5. Jones, Melanie K., Latreille, Paul L., and Sloane, Peter J. (2006). ‘Disability and work: a review of the British evidence’.  Estudios de Economía Aplicada, Vol. 25, No.2, pp 473-498. August 2007. National Equality Panel (2010) Anatomy of Economic Inequality in the UK. London: Government Equalities Office.
  6. http://www.ons.gov.uk/ons/rel/los/life-opportunities-survey/wave-two--part-i/rpt-chtp-6.html#tab-6-3-Severity-of-impairments
  7. Jenkins, Stephen P. and Rigg, John A. (2003). ‘Disability and disadvantage: selection, onset, and duration effects’, Working Papers of the Institute for Social and Economic Research, paper 2003-18. Colchester: University of Essex.
    Berthoud, Richard (2006) ‘The employment rates of disabled people’. Department of Work and Pensions, Research Report No 298.
  8. Labour market flows statistics are currently published as experimental statistics by the Office for National Statistics. For more details and for latest estimates, see http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/may-2013/labour-market-flows.html
  9. http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/august-2013/statistical-bulletin.html#tab-Employment
  10. http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/august-2013/statistical-bulletin.html#tab-Unemployment
  11. http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/august-2013/statistical-bulletin.html#tab-Economic-inactivity
  12. A person may qualify for a tax credit if he/she works but earns low wages.
  13. On the LOS, different questions on barriers were given to adults who were unemployed and who were economically inactive (not working and not seeking work, but were not students or retired). The two questions, though worded slightly differently, have the same response categories. Hence, responses collected on the two questions were combined for this analysis.
  14. For adults without impairment at both waves, 41% also cited ‘other reasons’ as barriers to work or seeking work. Examination of the data indicated that most of the adults who responded to this category were economically inactive rather than unemployed and that the verbatim responses included ‘taking a break from work’ or ‘do not want to work’.

5.2 Income

The LOS collects information on individual weekly income (gross, before income tax and national insurance deductions) measuring in £100 bands. Income can come from a number of sources, including earnings from employment, pension (personal and state), benefits, tax credits and interests from savings and investments1.

This section provides a comparison of individual weekly income at Wave One and Wave Two by looking at movement between income bands for the four analysis groups, i.e. whether the individual weekly income of adults in each analysis group decreased (moved down to a lower income band), did not change (stayed in the same income band) or increased (moved to a higher band). A comparison of the distribution of individual weekly income for adults in the four analysis groups is also provided.

Comparing income between Wave One and Wave Two

The majority of adults were found to be in the same individual weekly income band at Wave One and at Wave Two. This was true for all four groups – adults with impairment at both waves, offset adults, onset-acquired adults, and adults without impairment at both waves, and for adults of working age (16 to 64) and those aged 65 and over. In the same period, the UK economy experienced a downturn, which may have prevented increases in individual income.

Looking across the four groups, for adults of working age, 48% to 56% were in the same income band at Wave One and at Wave Two. For adults aged 65 and over, around 60% remained in the same income band between waves (Table 5.3). For some groups, a higher percentage had an increase rather than a decrease in their income band between waves. For example, of the working age adults without impairment at both waves, 31% had an increase from Wave One to Wave Two, compared with 18% who had a decrease in the same period. It is worth noting that in this analysis, we are looking at adults who moved between income bands. Adults may only have a small change in their income which results in a change in the income band to which they belong. Equally, some adults may remain in the same band, despite having a larger change in income.

The stability in income between waves could be due to the short gap (of only one year) between waves, which did not allow enough time for substantial changes to occur. Also, the lack of movement between economic activity status between waves (see section 5.1) may be a factor, as employment status influences levels of income. Additionally, the same period coincided with slow growth in the UK economy. During this time (2010/2011), growth in average earnings was 1.8%, which was lower than both Retail Prices Index (RPI)2 and Consumer Prices Index (CPI)3. This meant that for 2010/2011, average earnings fell in real terms. Lower-income households saw smaller decreases in income over this period4 because they are typically more dependent on income from benefits and tax credits which grew in cash terms and fell only slightly in real terms.

Table 5.3 Percentage of adults reporting an increase, no change, or decrease in their income band between Wave One and Wave Two, by groups and age

         Percentage     
    Increase No change Decrease Sample size (number)
Adults aged 16-64        
  Adults with impairment at both waves 24 56 20 2,480
  Offset 27 52 20 1,520
  Onset-acquired 27 48 25 920
  Adults with no impairment at both waves 31 51 18 4,740
           
Adults aged 65 and over        
  Adults with impairment at both waves 23 60 17 1,880
  Offset 21 61 18 660
  Onset-acquired 24 60 16 580
  Adults with no impairment at both waves 22 59 19 1,660

Table source: Office for National Statistics

Table notes:

  1. Sample sizes have been rounded independently to the nearest 10.
  2. All percentages have been rounded to the nearest 1.
  3. This data was revised on April 10th 2014.

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Income distributions at Wave Two – Working age adults

For adults of working age, those with impairment at both waves were more likely than other groups to have lower levels of income, whereas those with no impairment at both waves were less likely than other groups to have incomes of less than £200 a week.

Although there was little change in individual weekly income between waves, there were differences in income distributions between the four groups within waves. Figures 5.1 to 5.4 show the income distributions for working age adults at Wave Two. The income distributions were similar between Wave One and Wave Two, therefore, only Wave Two distributions are shown here5.

Just over half (53%) of working age adults with impairment at both waves had an income of less than £200 a week, compared with a third (34%) of offset adults and 36% of onset-acquired adults. Adults without impairment at both waves were least likely to belong to the lowest bands of the income distribution, with a quarter (25%) of this group having an income of less than £200 a week. The income distributions at Wave Two were most similar between the offset and onset-acquired adults.

As we have seen in Table 5.1, adults without impairment at both waves were more likely than other groups to be employed at both waves. Therefore it is not surprising that they were less likely than other groups to have lower income. The opposite is true for adults with  impairment at both waves – compared with other groups, this group had a smaller percentage who were employed at both waves, thus explaining in some way that around half of this group of working age were in the lowest bands of income. These findings are consistent with existing research linking disability and low income. For example, DDA-disabled adults  with a work-limiting condition have lower median individual weekly income than their non-disabled counterparts6.

Figure 5.1 Percentage of working age (16-64) adults with impairment at both waves, at Wave Two

Most working age adults with impairment at both waves had an income between £100 and £300 per week.

Notes:

  1. Source - LOS Wave Two Longitudinal Dataset, Office for National Statistics

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Figure 5.2 Percentage of offset working age (16-64) adults at Wave Two

Most working age offset adults had an income between £100 and £400 per week.

Notes:

  1. Source - LOS Wave Two Longitudinal Dataset, Office for National Statistics

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Figure 5.3 Percentage of onset-acquired working age (16-64) adults at Wave Two

Most working age onset-acquired adults had an income between £100 and £500 per week.

Notes:

  1. Source - LOS Wave Two Longitudinal Dataset, Office for National Statistics

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Figure 5.4 Percentage of working age (16-64) adults without impairment at both waves, at Wave Two

Most working age adults without impairment at both waves had an income between £100 and £500 per week, but with more in the higher income bands than other groups.

Notes:

  1. Source - LOS Wave Two Longitudinal Dataset, Office for National Statistics

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Income distributions at Wave Two – Adults aged 65 and over

For adults aged 65 and over, the income distributions at Wave Two were similar among the four groups. In all four groups, the highest percentage of adults aged 65 and over had an income of more than £100 but less than £200 a week, and only a small percentage had an income of over £600. Compared with other groups, adults aged 65 and over with no impairment at both waves were less likely to be in the lowest income bands (less than £200 a week).

In contrast to the working age, there is greater similarity in the income distributions for the four groups aged 65 and over (Figures 5.5 to 5.8). However, some subtle differences remain depending on the impairment status of the group. Adults aged 65 and over with no impairment at both waves had a lower percentage with income of £200 or less (46%) than those with impairment at both waves, offset or onset-acquired (all 56% or 57%). Therefore adults aged 65 and over with no impairment at both waves were more likely to be distributed at the middle or higher end of the income scale, compared with other groups.

It seems then that the absence of impairment at both waves may be an important factor in determining the amount of income received by adults aged 65 and over. Research elsewhere has shown that good health and the absence of disability are associated with higher levels of qualifications and socio-economic status7. It may be that compared with other groups who have a history of impairment, adults aged 65 and over with no impairment at both waves were more likely to have higher earnings during their working lives, thus allowing them to make financial provisions for their retirement. Consequently, they may be more likely than other groups to receive additional sources to their weekly income on top of their state pension. In support of this, the LOS data show that compared with other groups, adults aged 65 and over with no impairment at both waves were more likely to have pensions from former employers, personal pensions, interest from savings and investments as sources for their income.

Figure 5.5 Percentage of adults aged 65 and over with impairment at both waves, Wave Two

Most adults aged 65 and over with impairment at both waves had an income between £100 and £300 per week.
Source: Life Opportunities Survey - Office for National Statistics

Notes:

  1. Source - LOS Wave Two Longitudinal Dataset, Office for National Statistics

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Figure 5.6 Percentage of offset adults aged 65 and over at Wave Two

Most offset adults aged 65 and over had an income between £100 and £300 per week.

Notes:

  1. Source - LOS Wave Two Longitudinal Dataset, Office for National Statistics

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Figure 5.7 Percentage of onset-acquired adults aged 65 and over at Wave Two

Most onset-acquired adults aged 65 and over had an income between £100 and £300 per week.

Notes:

  1. Source - LOS Wave Two Longitudinal Dataset, Office for National Statistics

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Figure 5.8 Percentage of adults aged 65 and over without impairment at both waves, Wave Two

Most adults aged 65 and over with no impairment at both waves had an income between £100 and £300 per week.

Notes:

  1. Source - LOS Wave Two Longitudinal Dataset, Office for National Statistics

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Notes for 5.2 Income

  1. The full list of response categories for the sources of income question on the LOS: Earnings from employment; Earnings from self-employment; Pension from former employer; Personal pension; State pension; Child benefit; Income support; Tax credits; Other state benefits; Interest from savings; Interest from investments; Other kinds of regular allowance from outside the household; Other sources e.g., rent; No source of income.
  2. http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/july-2013/stb---consumer-price-indices---july-2013.html#tab-Retail-Prices-Index--RPI--and-RPIJ-
  3. http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/july-2013/stb---consumer-price-indices---july-2013.html#tab-Consumer-Prices-Index--CPI-
  4. https://www.gov.uk/government/publications/households-below-average-income-hbai-199495-to-201112
  5. The LOS fieldwork design means there was an overlap in Wave One and Wave Two fieldwork of one year. This makes it difficult to interpret comparisons of the income distribution between waves.
  6. National Equality Panel (2010). Anatomy of economic inequality in the UK. London: Government Equalities Office. Please note that disability may be defined using the Disability Discrimination Act (DDA) and therefore is different from the social model of disability applied by the LOS.
  7. See http://odi.dwp.gov.uk/disability-statistics-and-research/disability-facts-and-figures.php#p19. This factsheet from DWP, sourcing data from the LFS, shows that disabled people are less likely than non-disabled people to hold any form of qualifications. Disabled people are half as likely than non-disabled people to have a degree. Riddell, S., Edward, S., Weedon, E. and Ahlgren, L. (2010). Disability, skills and employment: A review of recent statistics and literature on policy and initiatives, research report 59, Manchester: Equality and Human Rights Commission.
    Burchardt, T. (2003). Being and becoming: Social exclusion and the onset of disability, Case Report 21, report prepared for the Joseph Rowntree Foundation.

Background notes

  1. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Get all the tables for this publication in the data section of this publication .
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