Britain’s workforce will slide to a record low as growing numbers of people too unwell to work dampen the economy’s future prospects, according to the tax and spending watchdog.
New projections from the Office for Budget Responsibility (OBR) suggest the share of over-16s either in work or looking for a job will never return to pre-pandemic levels. Instead, the combination of an ageing population and escalating health issues will leave a permanent mark on the labour market.
The OBR estimates that the proportion of adults participating in the workforce will decline to 61.8 per cent in the 2060s, the lowest figure on record. This reverses a decades-long pattern in which decreasing male employment rates had been offset by more women entering the workforce since the 1970s.
The participation rate peaked just before lockdown at 64 per cent, but has since fallen back to 62.8 per cent. Some 2.8 million people are now economically inactive because of long-term health conditions, ranging from mental health struggles to chronic pain. While improving health outcomes might seem a solution, the OBR warns that even major advancements won’t significantly boost workforce 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-related benefits since just before the pandemic, with no requirement to look for work. Of 2.9 million Universal Credit decisions linked to ill health, two-thirds were classified as having “limited capability for work and work-related activity,” granting them an additional £5,000 per year and freeing them from job preparation obligations.
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