UK workers have been laid off as the rise in disease eats away at the job market
Britain’s workforce will shrink as the growing number of people unfit to work reduces future economic prospects, according to tax and spending watchdogs.
New projections from the Office for Budget Responsibility (OBR) suggest that the share of over-16s either in work or looking for work will not return to pre-pandemic levels. Instead, the combination of an aging population and growing health issues will leave a lasting mark on the labor market.
The OBR estimates that the proportion of adults taking part in the workforce will fall to 61.8 per cent in the 2060s, the lowest figure on record. This reverses a decades-long pattern in which declining male employment rates were offset by more women entering the workforce since the 1970s.
The participation rate peaked just before the closure at 64 percent, but has since fallen to 62.8 percent. Some 2.8 million people are now unemployed due to long-term health conditions, from mental health struggles to chronic pain. While improving health outcomes may appear to be the solution, the OBR warns that even major improvements will not significantly improve labor force numbers.
The warning comes as new figures from the Department for Work and Pensions (DWP) reveal that 1.6 million people have started claiming sickness benefits since just before the pandemic, with no need to look for work. Of the 2.9 million sickness-related Universal Credit claims, two-thirds were described as having “limited capacity for work and work-related work,” giving them an extra £5,000 a year and exempting them from work preparation obligations.
Despite the government’s hope that cutting NHS waiting lists will boost economic growth, the OBR’s analysis casts doubt. It notes that even restoring people’s health does not guarantee that they will seek employment. This undercuts claims that reducing the NHS’s record £7.57m backlog would bring huge economic benefits. The OBR found that only around 28 per cent of working-age people recovering from illness or avoiding illness can enter or stay in work.
The Institute for Fiscal Studies (IFS) also highlighted the scale of the challenge. With 6.6 percent of the working population now out of work due to health, up from 5 percent in 2019, hitting the government’s employment targets will be difficult. The problem is even greater for older workers: 11.3 percent of those aged 55 to 64 are out of work because of health problems, compared to 8.9 percent four years ago.
Meanwhile, the Office for National Statistics (ONS) reports a decline in healthy life expectancy. Men can now expect to live 61.5 healthy years, and women 61.9 years—both figures are down from before the pandemic.
Overall, the OBR’s findings suggest that Britain’s labor market is facing long-term structural challenges. More than just the result of an aging population, ill health and declining labor force participation is likely to remain a constant drag on productivity and growth, challenging policymakers to find new ways to support individuals and keep the economy on track.
