Around 800,000 more sick and disabled people are out of work now than in 2019, costing employers £85billion a year, a new review by former John Lewis boss, Sir Charlie Mayfield, has revealed. This figure puts the UK at risk of an “economic inactivity crisis” that threatens the country’s prosperity, the report added.
One in five working-age people were out of work and are not seeking work, according to the report, which was commissioned by the Department for Work and Pensions (DWP) but produced independently. Without intervention, an additional 600,000 people could leave their jobs due to health reasons by the end of the decade. Sir Charlie said sickness costs employers £85billion a year through issues including lost productivity and sick pay, but it also costs the broader economy. He said the rise in sickness is being driven by a “surge” in mental health issues among young people and musculoskeletal issues, aches and joint pain in older people that was leading them to leave work.
However, Sir Charlie, who will lead a task force aimed at helping people return to work, said this worsening situation was “not inevitable”. He said the task force will work with GPs who report finding it difficult to assess whether a person is suitable to work while they are ill, but are asked to issue sick notes by patients.
The move has been broadly welcomed, but some business groups have said that Labour’s Employment Rights Bill includes some disincentives to hire people with existing illnesses.
“Work is generally good for health and health is good for work,” Sir Charlie told BBC Breakfast.
“For employers, sickness and staff turnover bring disruption, cost and lost experience,” he said. “For the country, it means weaker growth, higher welfare spending and greater pressure on the NHS.”
According to the BBC, the state spends £212 billion per year on illness-related inactivity – just under 70% of income tax – through lost output, increased welfare payments and additional burdens on the NHS.
The independent Office for Budget Responsibility (OBR) has forecast that the bill for health and disability benefits for working-age people alone is set to rise to about £72.3 billion in 2029-30.
This report comes as the Government attempts to move forward with its Employment Rights Bill, which some businesses have claimed will hinder growth. The proposed law includes a right to guaranteed hours and cracks down on zero-hour contracts without the offer of work. Chancellor Rachel Reeves is also aiming to guarantee paid work to young people who have been out of employment for 18 months. Those who do not accept the offer may lose their benefits.
Following former John Lewis boss Sir Charlie Mayfield’s warning, George Holmes, Managing Director of business finance specialists Aurora Capital, highlighted the potential impact on small UK businesses:
“These figures highlight a growing problem that often goes unnoticed. With a startling one in five working-age individuals out of the workforce, this is an economic issue that disproportionately affects small businesses.
“Most SMEs simply cannot afford long absences or the cost of replacements. Every lost team member means lost knowledge and potentially lower productivity, as well as slower growth.
“Government support for helping people return to work is welcome, but it must be practical. Many small employers already want to help their staff stay well and return to work after illness, but they lack access to affordable occupational health services and clear guidance. What they don’t need are new layers of compliance or one-size-fits-all rules that make hiring riskier.
“Good health and good work go hand in hand. If the government’s task force genuinely partners with small employers and offers tools, training, and tax relief to keep staff healthy and engaged, it could make a real difference. However, without that support, this £85 billion problem will continue to grow, dragging small businesses and local economies down with it.”
