The United Kingdom is experiencing a critical rise in economic inactivity, reaching its highest level since 2011, according to the Office for National Statistics (ONS). In the three months leading to April, over 9.4 million adults were not participating in the labour force, with long-term sickness cited by a record 2.83 million individuals as the primary reason for their economic inactivity.
Employment levels dropped by 139,000 in the reviewed period, while unemployment simultaneously rose by an equivalent number, now exceeding 1.5 million individuals—the highest figure observed since 2021. Tony Wilson, director of the Institute for Employment Studies, underscored the gravity of the issue, noting that the UK is almost unique among developed nations in experiencing a post-pandemic decline in employment rates. ‘When employment stops growing, so does the economy. This parliament has seen the largest rise in economic inactivity and the largest contraction in the size of the workforce since comparable records began in 1971,’ he stated.
The ramifications of this trend are far-reaching, with Alexandra Hall-Chen of the Institute of Directors revealing that nearly half of businesses are finding it increasingly difficult to secure the required staff. She stressed, ‘Stabilising rising costs and bringing people back into the workplace needs to be a focus for the next government. Without action to increase domestic labour supply, strong economic growth will be all but impossible.’
Unexpected wage growth has added another layer of complexity to the economic landscape. The ONS data showed average regular earnings increased by 6% over the past year, partially fuelled by a nearly 10% rise in the minimum wage. This wage pressure complicates the Bank of England’s plans to reduce interest rates ahead of the forthcoming election. Simon French of Panmure Gordon remarked that wage growth remains ‘too hot’ to justify reducing borrowing costs, while Thomas Pugh from RSM added that the combination of strong pay growth, sticky inflation, and the upcoming election leaves almost no chance for a rate cut in the near future.
Labour’s shadow work and pensions secretary, Liz Kendall, criticised the Conservative government’s management of the worklessness crisis: ‘On Rishi Sunak’s watch, a record number of people are out of work due to long-term sickness at terrible cost to them, to business and the taxpayer, and we remain the only G7 country whose employment rate still isn’t back to pre-pandemic levels.’ Meanwhile, the Conservative manifesto, launched on Tuesday, aims to address these issues by tightening how the benefits system assesses work capability. From September 2025, individuals with moderate mental health issues or mobility problems will receive tailored support to engage with the workforce rather than being placed on benefits.
The escalating issue of economic inactivity is a significant challenge for policymakers aiming to revitalise the UK’s labour market. As the ONS data reveals startling figures, it becomes imperative for the next government to implement measures that will not only address long-term sickness but also create a conducive environment for economic growth. The confluence of record-high worklessness, wage growth, and the political landscape demands strategic interventions to secure the nation’s economic future.
The unprecedented rise in economic inactivity poses a substantial threat to the UK’s growth prospects. Policymakers must urgently address the root causes of this issue and introduce effective measures to stabilise the labour market. The collective effort of government, businesses, and stakeholders is essential to reversing this trend and ensuring sustainable economic development.
