bRussia has a sick economy and it is getting sicker. The clear message from last week’s set of economic data is that Britain is being held back by the growing number of people unable to work due to long-term illness.
There are many theories about why the trend is worsening. Possible factors include a long period of Covid-19, delays in NHS treatment as waiting lists lengthen, poor workplace practices, stress and the impact of budget cuts.
But one thing is certain. The economic impact of ill health is giving Jeremy Hunt a headache. It will be a headache for Rachel Reeves if she becomes the first female chancellor. It’s a headache for any company struggling to fill vacancies.
Figures released by the Office for National Statistics last week illustrate the scale of the problem. The number of people who say they are inactive due to long-term illness now stands at 2.8 million – an increase of over 200,000 in the past year and of 700,000 since the pandemic began in 2020.
This matters, and not just for those who would be working if their circumstances were different. These high levels of long-term illness help explain why Britain’s working population is 700,000 people smaller than pre-coronavirus levels, why the labor market is so tight and why the economy is flattening.
Jane Gratton, deputy director of public policy at the British Chambers of Commerce, said: “Businesses are increasingly concerned about higher levels of inactivity and their economic impact. It has consequences for growth and inflation. Wages are rising due to a skills shortage. This has consequences for both employers and individuals.”
This is not a new issue. Large numbers of workers became disabled when factories and coal mines closed during the deindustrialization of the 1980s and 1990s. This century, Britain has had a higher proportion of people inactive due to ill health than Germany, France or Italy. But two new factors – Covid and longer NHS waiting lists – have made things significantly worse in recent years.
But what is particularly worrying for economic policymakers is that Britain has gone from being the G7 country with the lowest levels of inactivity to the country where, uniquely, the working population has yet to return to pre-pandemic levels.
The Office of Budget Responsibility has noted: “The available international evidence suggests that while Britain is a consistently strong performer internationally in working-age worker participation, the post-pandemic rise in inactivity stands out. And poor health has consistently been a bigger factor behind inactivity in Britain than in most other advanced economies, with post-pandemic trends likely to have widened these differences.”
While it would be tempting to call Britain the sick man of Europe, that would not be strictly accurate. Feminist think tank Women’s Budget Group (WBG) has pointed out that there are 200,000 more women than men who are inactive due to ill health (1.5 million versus 1.3 million). The WBG says this is not just due to Covid, but continues a trend that was already visible before the pandemic.
Zubaida Haque, deputy director of the WBG, said women are more likely to hold low-paid jobs and suffer the impact of austerity. “This didn’t happen in a vacuum. Women were disproportionately affected by the pandemic, but they were also hit harder by benefit cuts between 2010 and 2020. There is no point in the government trying to tackle the symptoms of the problem.”
Hannah Slaughter, senior economist at the Resolution Foundation think tank, said the 2.8 million people who are inactive due to long-term illness are a real concern: “This is holding back the economy, putting pressure on public finances and the NHS and limiting opportunities for to much people. Reversing this trend will be a priority for the current and next administration.”
According to the Department for Work and Pensions, the government is already working on the matter. A spokesperson said: “With four million extra people in work since 2010, we are now going even further. The welfare reforms are expected to reduce the number of people who would otherwise have been placed in the highest level of disability benefits by more than 370,000.
“Our back-to-work plan will help more than a million people, including those with disabilities and long-term health conditions, get and stay in work, as we continue to reduce inflation, lower taxes and growing the economy.”
One option for the government would be to try to fill the hundreds of thousands of vacancies by tightening social services. But experts such as Ben Harrison, director of the Work Foundation think tank, have warned that forcing people into work through punitive measures would be counterproductive and could lead to more ill health.
Whatever approach it decides to take, the government is under pressure to do more, both in preventing illness and in tailoring return-to-work programs for those on sick leave to ensure that they do not leave the labor market. all together. Although inactivity due to ill health has made headlines recently, many people work with health problems, and are more likely to continue if they have the right support.
A study by left-wing think tank Institute for Public Policy Research found that people were more likely to leave work because of a heart condition than any other health problem. The IPPR states that someone who develops a cardiovascular disease in 2021-2022 has a 22% chance of leaving their job, compared to 14% for those with a mental health problem and 16% for those diagnosed with cancer.
Chris Thomas, head of the IPPR committee on health and prosperity, said: “After great progress in tackling cardiovascular disease in the 20th century, Britain is now slowing down, if not reversing. This not only costs lives, but also livelihoods. The good news is that heart disease is one of the most preventable health problems, but the government must take the lead and implement proactive policies. Both human lives and economic prosperity depend on it.”
The BCC’s Gratton said companies can help by allowing flexible working, investing more in occupational health and offering health insurance to their staff.
Jon Boys, senior research economist at the Chartered Institute of Personnel and Development, said the reduction in the number of workers is exacerbating labor supply problems and limiting growth.
There was ample evidence of both in last week’s economic data, with the ONS reporting more than 900,000 vacancies and unemployment below 4%, at a time when the UK economy was in recession. Boys said breaking down barriers to work for people with health problems should be a priority for policymakers and employers.
Like Gratton, he said it is crucial to focus on occupational health to prevent people from prematurely leaving the labor market: “It’s all very well to get people back to work, but it’s The bigger problem is that they do not leave the labor market in the first place. place.”
Boys said both the government and employers need to tackle inaction: employers by raising awareness of the impact of stress in the workplace and tackling heavy and unsustainable workloads, and ministers by tackling NHS waiting lists.
“The government must recognize that health policy is economic policy,” Boys said. “They cannot be dealt with in silos.”