What government workforce plans could mean for UK employers

What can employers do to help the Government tackle economic inactivity due to ill-health and disability?

Economic inactivity – defined as people who are not in or seeking employment - due to long-term sickness has surged to over 2.7 million people for 24 consecutive months.

This is equivalent to almost a third of all economic inactivity and has now become the most common driver of workforce absence, having overtaken the portion of non-workers who are students.

This is an issue for the Government because by 2030, it projects that 600,000 more people could become economically inactive if recent trends continue, losing out on opportunities in the workplace and tightening an already challenging labour market.

The Labour government set out its plans to kickstart growth in the economy in its Get Britain Working White Paper last year, in which it made a commitment to build an inclusive and thriving labour market.

As part of these plans, the Government asked Sir Charlie Mayfield (former chair of John Lewis) to lead an independent review called Keep Britain Working focusing primarily on how employers can:

Prevent people from falling out of work due to ill-health
The barriers faced by disabled people, and
How to increase support to help create new pathways for returning to work

Clearly, employers play a key role here in tackling health-based economic inactivity and promoting healthy and inclusive workplaces.

Long-term ambition

The aim of the review is to make recommendations to the Government on what more employers can do to tackle economic inactivity due to ill-health and disability, and what the Government would need to do to encourage and support those affected in work.

In doing so, the review will be looking to support the Prime Minister’s long-term ambition for the UK to reach 80% employment, which would rank the UK as one of the highest-performing countries in the world.

To achieve this ambition, the UK would need the equivalent of over two million more people in work based on today’s numbers.

The discovery phase of the Keep Britain Working review, published on March 20, sets out the current economic inactivity situation and the issues that need to be addressed to improve it, in order to prompt engagement and evidence gathering.

A summary of the key findings

Rising economic inactivity due to health reasons: Since 2019, driven mainly by health-related issues, nearly 800,000 more working-age people are economically inactive, a growth rate vastly exceeding the increase in the working-age population.
Increasing prevalence of work-limiting health conditions: Over two million more people report such conditions since 2019, representing a 31% increase, and one in five working-age individuals face these challenges. The issue spans workplaces and the benefits system.
Dramatic impact on young and older demographics: Between 2015 and 2024, work-limiting health conditions surged among younger people by 77% and older individuals by 32%, with mental health and musculoskeletal issues being major contributors. Those out of work for less than a year are nearly five times more likely to return than those out of work for longer.
Economic and societal losses: The inactive population leads to a £150bn loss in productive capacity, equating to public finances comparable to the defence budget, with projections suggesting worsening trends by 2030 and an additional £25bn in welfare spending.
Urgent need for systemic change: Addressing economic inactivity requires prevention, early intervention, rapid rehabilitation, and improved pathways to work. Employers, systems, and government must align efforts to retain, support, and reintegrate individuals into the workforce.

The next phase of the review aims to discover initiatives that are making a difference with evidence of impact, and as a specialist employee benefits provider, Unum will be engaging with Sir Charlie Mayfield and his team on how we successfully help people to stay in and return to work.

The components of group income protection - prevention, retention, early intervention, rapid rehabilitation and case management - are front and centre in the review in supporting people with ill health to stay in work.

So, the recognition by Government of the effectiveness of workplace health and vocational rehabilitation may catalyse more employers of all sizes to offer more to support their employees.

The third and final phase will be the recommendations to the Government, which is expected in the Autumn, where we expect to see a strong focus on incentives, interventions and case management.

There can’t be one single approach; tailored support is needed for different workforce segments, however businesses can be encouraged to invest in prevention services and seek to retain their workforce with better utilisation of early intervention and return to work support.

It's clear that employers will play a central role in addressing economic inactivity due to ill-health, and this review paves the way for a collaborative and aligned effort between employers, policymakers and providers like Unum to ensure that every individual, regardless of health challenges, has the chance to thrive on their professional journey.