It is commonplace to attribute much of the growth in the numbers of people claiming disability benefits to changes in the economy. A process usually singled out is the decline in manufacturing industries, leading in particular to inflows onto Incapacity Benefit from men formerly working in manual trades. However, the realisation that more disabled people were working in the recession of the 1990s than in the more buoyant part of the 1980s suggests that the world is more complex than received wisdom, or the understanding that sometimes drives policy (Berthoud, 1998b). While repeated recessions have undoubtedly impacted on disability benefit caseloads, account needs to be taken of the needs and behaviour of employers, as well as the process by which workers move into economic inactivity.

This chapter concentrates largely on Incapacity Benefit, as it has a more direct relationship to the labour market than additional costs benefits. However, it should be borne in mind that the consequence of economic change in creating poverty may have a knock-on effect on claims for extra costs benefits (see Chapter 12).

There are two main ways in which changes in the labour market may have had a direct influence on the people claiming Incapacity Benefit. The first, the increasing participation of women in the labour market, has had a straightforward effect. As a consequence of working, more women have become eligible for Incapacity Benefit on account of being able to satisfy the National Insurance contribution conditions – the proportion of female recipients rose from 19% in 1972/73 to 32% in 1998/99.