Unlike the rest of Europe and America, labour participation keeps going up
There are many ways to measure the success of an economy, but if you had to pick just one indicator, especially for making comparisons between countries, there’s a strong case for the labour force participation rate among “prime age” males (i.e. those aged between 25 and 54).
Female workers are also important, but participation rates among women differ between countries for cultural reasons as well as economic ones. Older workers also matter, but retirement ages vary from nation to nation, again making comparisons difficult.
So, for these reasons and others, it makes sense to focus comparisons on prime age men. A chart tweeted out by the economist Robin Brooks, shows how the labour force participation rate has changed since 1995 for eight different countries.
The US labor market is often held up as a success story. But it isn't if you're a prime-age male. Men between the ages of 25-54 (pink) have a labor force participation rate that is nearly as low as Italy (red). And Italy is by far the worst country in this regard in the G10… pic.twitter.com/jGlUUS8Jp6
— Robin Brooks (@RobinBrooksIIF) January 26, 2022
The overall story is one of decline. In most countries, participation rates were higher twenty years ago than they are now. Brooks points out that American men have done particularly badly. Only Italy has done worse (and that’s an economy that’s been stagnant since it joined the single currency).
Greece, Spain and Portugal do better — which may come as a surprise given how hard they were hit by the Eurozone Crisis. However, these are figures for the 25-to-54 age group and so don’t include the high levels of youth unemployment suffered in these countries.
There’s one country that stands out from the others: the United Kingdom. In our case, the labour force participation rate has increased over the last two decades. From having one of the lowest rates 20 years ago, we now have the highest of the countries shown.
But is this the right priority? Does it really matter if the Labour Force Participation Rate is, say 92%, as opposed to 87%? Well, it matters to people. In the UK, each 1% increase or decrease amounts to more than 100,000 men of prime working age either in or out of a job.
Factor in their families too, and it’s clear that these are numbers that make a difference to the well-being — and political stability — of a nation.