Unemployment vs economic activity rate

So the unemployment figures are out and unemployment is down by 7,000 people reducing the unemployment rate from 7.9% to 7.8%. This is obviously a good thing, although doesn't help my case in my last post.

However there is another figure that isn't looked at often which is the economic activity rate. That is the percentage of people within the labour force who are either in work, or looking for work. This would include for example people who have taken early retirement, and also I believe people who are on incapacity benefit and other benefits (but obviously not job seekers allowance.) The economic inactivity rate (the percentage of people who are neither in work nor looking for work) figure has actually increased to 21.2% in the last quarter, its highest since August 2007.

Unemployment is clearly an important measure to the success of the economy, and the confidence of business, but less economically active people is obviously an issue for the Treasury because it means less tax revenues and potentially a higher deficit.

Update:
There's more bad news in today's figures as well with the number of long term unemployed (unemployed for a year or longer) increasing by 29,000 to reach 631,000 people, the highest since November 2007 and representing 25% of all unemployed people. I'm guessing though that this and the economic activity rate won't get past the spin of falling unemployment figures. I'm sure Brown won't be mentioning it at PMQs today. I hope someone at CCHQ is paying attention.

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