The UK maintains a positive outlook, despite the recession

3 March 2011

A survey of households across the UK taken at the height of the recession in 2009 show 67 per cent of people in full-time work were living comfortably or doing allright and that unemployed people were broadly optimistic about their future prospects. Almost two-thirds of the unemployed stated that they expect their financial situation to improve in the next year, compared with 30 per cent of those in work and 25 per cent of the economically inactive. 

More than 15,000 adults of working age took part in the survey for Understanding Society, the world largest household panel study funded by the Economic and Social Research Council and run by the Institute of Social and Economic Research (ISER) at the University of Essex. The survey which will follow 40,000 UK households over many years, asks people about a wide range of topics including their employment status, families, income levels and well-being. 

It found that people’s employment status during the recession had a major impact on how they coped financially. Forty per cent of the unemployed reported finding it quite or very difficult financially, compared to 25 per cent of the economically inactive and less than 15 per cent of those in work.  Employment status also affects people’s life satisfaction. Those in some form of employment reported a life satisfaction average of 5.3, on a seven point scale, while the unemployed and the economically inactive have the lowest average life satisfaction of 4.7 and 4.8 respectively.

Interestingly, this trend is reversed for young people (under the age of 25 years). When accounting for other characteristics, among young people economic inactivity is associated with the highest life satisfaction (a predicted life satisfaction of 5.5), followed by unemployment (5.4) and full-time work (5.3).  Though unemployment is running at 15 per cent for the under 25s it would appear that being unemployed, in the short term at least, has little impact on mental wellbeing among young people.

Other findings show that a high level of education is still beneficial in the labour market, with 60% of people with degrees in full-time employment compared to only 32 per cent of people without qualifications. For men being in a relationship has a very positive impact on their employment prospects. Men in relationships, with or without children, have the highest likelihood of being employed full-time and are least likely to be economically inactive. Male lone parents have the lowest predicted probability of full-time employment and the highest probability of economic inactivity.

Dr Mark Taylor at ISER comments: "This first look at employment and unemployment during the recession, and their impacts on financial and mental wellbeing has revealed a strong relationship between labour market status and age, education, family status and ethnicity.  The high levels of optimism among the unemployed in relation to their financial situation improving are surprising and it will be interesting to see how this evolves over time."

The findings also highlight differences in employment by country:

  • rates of full-time employment are highest in England and Scotland (at 50 per cent) and lowest in Wales and Northern Ireland (45 per cent)
  • part-time employment is highest in Wales (18 per cent) and lowest in England and Northern Ireland (16 per cent)
  • economic inactivity is highest in Wales and Northern Ireland (25 per cent) and lowest in England and Scotland (20 per cent) 
  • 51 per cent of people living in Wales reported living comfortably, compared with about 58 per cent in the other three nations, while 34 per cent reported just about getting by (compared with about 27 per cent in the other countries)

Although the numbers of people from minority ethnic groups in this release of the data are small, the findings on ethnicity and employment are generally consistent with that from other sources.  When allowing for other differences between individuals in terms of, for example, age, education and marital status, initial analysis suggests that:

  • White men and men of Caribbean origin have the highest predicted probabilities of full-time employment at all ages. White men: 69 per cent probability of being employed at age 40 falling to 52 per cent at age 55, and Caribbean men: 72 per cent probability of being employed at age 40 falling to 54 per cent at age 55.
  • they also have the lowest predicted probabilities of economic inactivity (9- 23 per cent for White men and 9 – 26 per cent for Caribbean men)
  • women of Black Caribbean origin have the highest predicted probability of full-time employment at all ages (47-61 per cent), followed by those of Black African (33– 47 per cent) and White origin (32-45 per cent). Women of Black Caribbean background also have the lowest predicted inactivity rates (13–21 per cent)
  • women of Pakistani or Bangladeshi background have very low predicted probabilities of full-time employment (19–31 per cent), and relatively high predicted probabilities of economic inactivity (48–61 per cent)
  • men of Black African origin have the highest predicted probability of economic inactivity (17-38 per cent), followed by those of Pakistani or Bangladeshi origin (14 – 34 per cent)

Dr Taylor added: "Though our findings are based on a small sample of ethnic sub-groups, it does mirror many of the findings from the Equality Commission. Once more data is collected over time we will be able to investigate more thoroughly the dynamics of employment and earnings within ethnic minority groups."

The first findings book is published online at http://research.understandingsociety.org.uk/findings/early-findings. Individual chapters are also available to download.

The first set of data from Understanding Society is now available for researchers to use in their analysis. It can be accessed via the Economic and Social Data Service.

For further information contact:

ISER Press Office:

ESRC Press Office:

Notes for editors

  1. Mark Taylor is a Reader at the Institute of Social and Economic Research (ISER) at the University of Essex. His research interests include labour market economics and dynamics and unemployment Understanding Society is a world leading study of the socio-economic circumstances in 40,000 British households. The study allows for deeper analysis of a wide range of sections of the population as they respond to regional, national and international change.
  2. The findings above are taken from 'Understanding Society: Early findings from the first wave of the UK’s household longitudinal study', Chapter 6 'Employment and Unemployment at a Time of Recession' by Mark Taylor investigates factors associated with people’s employment status and the impact of employment status on people’s wellbeing. The full chapter can be found at http://research.understandingsociety.org.uk/findings/early-findings
  3. Understanding Society is a world leading study of the socio-economic circumstances in 40,000 British households. The study allows for deeper analysis of a wide range of sections of the population as they respond to regional, national and international change. Understanding Society will greatly enhance our insight into the pathways that influence peoples longer term occupational trajectories; their health and well-being, their financial circumstances and personal relationships. Understanding Society also breaks new ground with its interdisciplinary focus. The study will capture biomedical data on 20,000 participants and place this alongside rich social histories, helping us weigh the extent to which people's environment influences their health.
  4. Understanding Society has been commissioned by the Economic and Social Research Council (ESRC). The Research Team is led by the Institute for Social and Economic Research (ISER) at the University of Essex. The National Centre for Social Research (NatCen) delivers the Study.
  5. The ESRC have contributed £27 million towards the funding of Understanding Society, and have successfully secured a total of £19.4 million from the Department for Business, Innovation and Skills Large Facilities Capital Fund. A further £2.61 million has been secured from a consortium of Government Departments. This funding will support the first five waves of the study until 2015. It is envisaged that the study will continue for up to 20 years.
  6. The ESRC is the UK's largest organisation for funding research on economic and social issues. It supports independent, high quality research which has an impact on business, the public sector and the third sector. The ESRC’s total budget for 2010/11 is £218 million. At any one time the ESRC supports over 4,000 researchers and postgraduate students in academic institutions and independent research institutes.