Where have all the workers gone? The answer could lie in the NHS

Something strange has happened to the British labour market. Unemployment has fallen to record lows, but the number of people in work has failed to reach record highs. The last prime minister kept getting into trouble for claiming that there were more people in work than before the pandemic, which wasn’t true and still isn’t.

There has been a rise in the number of people who are neither working nor looking for work. That was to be expected during the pandemic, and it happened around the world. But since the pandemic the numbers of the “economically inactive” have returned to normal in most countries, but not in the UK.

I have written about this before, when I reported that Clare Lombardelli, the government’s chief economic adviser, was worried about it. Since then, more evidence has been published that helps to explain what is happening. The rise in numbers has been driven by the over-50s leaving the labour market because they are in poor health. The Health Foundation found that this trend began before the coronavirus, and that it has continued – in the UK – afterwards.

This cannot be because of long Covid, because it hasn’t happened in other countries to the same extent.

The explanation that fits the evidence best is that the National Health Service is failing to treat people with long-term illnesses who in other countries would have been helped back to work, as Emma Duncan wrote in The Times on Thursday. The NHS was under strain before the pandemic, with waiting lists rising, and it continues to do worse than comparable health systems now. On Thursday, new waiting list figures showed that one in eight of the population of England is on a waiting list.

This is not the only indicator suggesting that there is a fundamental problem with the NHS. Rebecca Thomas, our health correspondent, has done some work on the data with the Financial Times that suggests more people are dying than would be expected, because of NHS backlogs.

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In my view, there are two possible ways to tackle the problem. One is the New Labour way: more money plus continuous reform. This seemed to work by 2010 – that is probably when the NHS came closest to working as it should. Recently, more money has gone into the NHS, but large parts of it still seem close to being overwhelmed by Covid backlogs and the social care crisis.

The other is to ask whether we would be better off with a continental European social insurance system. I don’t know what the answer is, but I think that is the question.

Yours,

John Rentoul

Chief political commentator