Disability and skills in a changing economy

Abstract

This paper presents an overview, drawing on existing literature and data, of the employment situation of disabled people, looking at the recent past and possible future developments, with a particular emphasis on the role of skills alongside other factors in influencing that situation.Key points emerging from the review include the following. Labour market disadvantageOn the broadest definition of disability one in five of the working age population are disabled.Disability prevalence increases with age, and disabled people are, therefore, older than average.Disabled people suffer massive labour market disadvantage which has not been significantly reduced by policy interventions and legislation:  Around half of working age disabled people are not in work.Most are economically inactive rather than unemployed.Significant proportions (30-40 per cent depending on definition) say, however, that they want to work. Disabled people"s disadvantage is also reflected in lower hourly earnings. Neither type of disadvantage (jobs or earnings) is wholly explicable by personal characteristics: it seems that employer discrimination remains significant. Labour market disadvantage varies markedly by type of impairment, and is especially high among people with mental health conditions, and people with learning disabilities. The relative disadvantage of disabled people is rather insensitive to cyclical economic fluctuations, but highly sensitive to local variations in demand (the "disability penalty" is higher in poorer-performing local economies). Skills and qualificationsDisabled people have a different skills/qualifications profile from non-disabled people:  They are twice as likely as non-disabled people to have no qualifications, and only two thirds as likely to have qualifications at level 4 and above.  The qualifications gap persists in all age groups.vi  There is a complex two-way relationship between disability and qualifications.Disability may result in people acquiring fewer qualifications, but equally early educational disadvantage raises the likelihood of becoming disabled later in life. The qualifications gap is a major cause of poor labour market outcomes among disabled people. Although disabled people are less well-qualified than non-disabled people, there is evidence of under-utilisation of disabled people"s skills (due to employer discrimination, or to a narrower range of jobs being available to disabled people). Employment patterns and recent trendsConsistent with the skills profile, disabled people are less likely than non-disabled people to work in high level (managerial, professional and technical) occupations, and more likely to work in lower level and manual occupations.However, the sectoral profiles of disabled and non-disabled workers" jobs are similar (disabled people are slightly under-represented in banking, finance and business services, and slightly over-represented in the public sector).Disabled people"s employment held up relatively well in the recent recession, and gap in employment rates between disabled and non-disabled people has closed slightly.Longerterm evidence shows that the disability penalty, although it grew up to 2000, has been relatively insensitive to economic fluctuations.However, the recent experience raises the question of whether the Disability Discrimination Act (DDA) may be starting to have an effect (possibly asymmetrically: the DDA may be better at protecting disabled people in a downturn, than at encouraging recruitment in an upturn).Similarly, the disabled/nondisabled wage gap has narrowed slightly in the recession.

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