After enduring years of austerity and weathering the storm of the Covid-19 pandemic, Britain's economic growth faces a daunting reality an ailing workforce and businesses grappling with recruitment struggles. The path to recovery, encompassing both health and economy, unfolds as a prolonged and challenging journey ahead.
Britain's Ailing Economy: Challenges Amidst Growing Long-Term Illness
Britain's economic health is a growing concern, evident in the latest economic data revealing a surge in individuals unable to work due to long-term illness. The worsening trend prompts various theories, including long Covid, NHS treatment delays, workplace practices, stress, and the lingering impact of austerity.
Regardless of the causes, the economic repercussions pose a significant challenge for leaders like Jeremy Hunt and potentially Rachel Reeves. As businesses grapple with filling vacancies, the impact of ill health becomes a widespread concern.
Statistics Highlight Long-Term Sickness Impact on UK Workforce and Economic Growth
Recent statistics from the Office for National Statistics underscore the severity of the issue. The number of individuals reporting inactivity due to long-term sickness has surged to 2.8 million, marking an increase of over 200,000 in the past year and a staggering 700,000 since the onset of the pandemic in 2020. The impact extends beyond the affected individuals; it sheds light on why the UK's workforce is now 700,000 smaller than its pre-Covid level, contributing to a tight labour market and a stagnant economy.
Jane Gratton, deputy director of public policy at the British Chambers of Commerce, emphasized: “Businesses are growing increasingly concerned about higher levels of inactivity and its economic impact. It is impacting on growth and inflation. Wages are rising because of skills shortages. This has an effect on both employers and individuals.”
This issue is far from new. During the deindustrialization of the 1980s and 1990s, a considerable number of employees were forced out of the workforce with the closure of factories and coal mines. Throughout this century, Britain has consistently had a higher percentage of individuals inactive due to ill health compared to Germany, France, or Italy. However, two recent developments – the impact of Covid and extended NHS waiting lists – have significantly exacerbated the situation in recent years.
What raises particular concern for economic policymakers is that Britain has shifted from being the G7 country with the lowest levels of inactivity to the only one where the workforce has not yet rebounded to pre-pandemic levels.
Government Responses to UK Workforce Challenges, Post-Pandemic Inactivity and Illnesses
The Office for Budget Responsibility has emphasized a concerning shift in the UK's post-pandemic landscape, noting, “The available international evidence suggests that while the UK has consistently been a strong performer internationally in terms of working-age participation, its post-pandemic rise in inactivity stands out. And ill health has consistently been a bigger factor behind inactivity in the UK than in most other advanced economies, with post-pandemic trends likely to have amplified these differences.”
The Department for Work and Pensions reports active government efforts to address long-term sickness inactivity, emphasizing a back-to-work plan and welfare reforms. While tightening welfare conditions is considered for job vacancy filling, experts, including Ben Harrison from the Work Foundation think tank, caution against punitive measures due to counterproductivity and health concerns.
Pressure is mounting for comprehensive government action, focusing on preventing illness and tailoring back-to-work programs to retain individuals on sick leave in the labour market. Importantly, many individuals with health issues are currently employed and are more likely to continue with adequate support.
The IPPR study reveals heart conditions lead to a 22% likelihood of leaving work, surpassing mental health (14%) and cancer (16%). Chris Thomas emphasizes the economic impact, urging proactive government policies to prevent heart disease. Gratton suggests firms can help through flexible working, investing in occupational health, and providing medical insurance.
Boys stresses the compounding effect of workforce reduction on labour supply and growth, calling for a focus on breaking down barriers for workers with health problems. He emphasizes the interconnectedness of health and economic policies, urging holistic approaches from both government and employers.