Unemployment is up… but Britain’s sickly workforce is an even bigger problem

Britain’s unemployment rate has risen to a six-month high of 4.2 per cent, and the number of vacancies has fallen for the 21st consecutive month (no, you did not misread that number). Those are the headlines from the latest labour market data.

While this is clearly bad news, there is a longer-term and far more troubling trend to be found within the numbers served up by the Office for National Statistics (ONS): our workforce is a sickly one. And it is getting sicker.

The “economic inactivity” rate for working-age adults rose to 22.2 per cent over the December-February period; there were 9.4 million people not in work, not looking for it, and not claiming unemployment benefit. That is a rise of 150,000 when compared to the previous quarter, and 275,000 when compared to a year ago.

Those classed as “economically inactive” include students, carers looking after family members, and people who have retired early as well as those too ill to work. However, the ONS said the increase over the last quarter was mainly down to a rise in long-term sickness along with a jump in the number of students, which often occurs when unemployment is rising. Resolution Foundation, a think tank focusing on low pay, notes that those inactive because of ill health hit a new record high of 2.8 million.

Tony Wilson, director at the Institute for Employment Studies, describes this as the “most concerning” part of the ONS release, because economic inactivity is now “even higher now than it was in the depths of the pandemic”.

Think that through for a moment; it is startling.

“The trouble is that not enough people out of work are looking for jobs, rather than people who are looking for jobs being unable to find them,” Wilson says. That might seem counterintuitive given the rise in unemployment, but the labour market is still bedevilled by shortages in numerous areas and we can also expect unemployment to fall again as the economy pulls itself out of recession.

The British Chambers of Commerce (BCC) picked up on the same point, saying it is “concerned by the growing number of people not looking for work, a large chunk of whom are out of action due to long-term health issues”.

Both rightly fear this will hold back the economy, and make life extremely difficult for businesses; it is concerning how little is being done to address this.

The government sometimes gives the impression the problem is about lazy Brits who don’t want to work; the principal focus of the Department for Work and Pensions seems to be on cutting the benefits bill. The fact that the British economy currently resembles an Austin Allegro, coughing and spluttering its way towards a giant roadblock, appears to be much lower down the government’s priorities.

Ministers can eulogise about wellness notes, or whatever they’re calling them these days, and piously claim that they want to focus on what sick and disabled people “can do” as opposed to what they can’t, but they fail to address the core issue: those “economically inactive” due to ill health aren’t darkening the doors of job centres, nor are they looking for sickness or wellness notes. They are the ghosts at the policy table.

There are practical steps that could be taken to address this problem. The most obvious, espoused by the TUC, among others, is to invest in the NHS. If you want a healthier workforce, the health system would be a good place to start.

But pay heed to the part of the BCC’s response to the ONS: “More must be done to help people with ill health stay in work and to help employers understand how best to support them.” The BCC is saying: our members want to be part of the solution but they do need some assistance.

Some larger, richer employers are ahead of the game, offering access to the likes of occupational therapy, mental health support, even physiotherapy. All of these are services that could help people stay in work for longer and to avoid problems that could incapacitate them. Needless to say, they can be desperately hard to access on the NHS.

But not all employers are big and rich. In a recent policy paper, the BCC advocated for a “business health support service” to “offer guidance, ensure that employers have choice over what services to put in place to support employees’ needs, and reduce the excessive tax burden on employers offering health and wellbeing related services”.

You would expect a business group to want lower taxes; but if this means more firms stepping in to help where the NHS is falling down, that doesn’t make it wrong. And the idea of a business health support service: would someone tell me why this doesn’t already exist?