How can the next government improve the health of the workforce and boost growth?

Improving the employment chances of people with long-term health conditions or disabilities has been a longstanding policy challenge. Past efforts have included the introduction of the Work Capability Assessment from 2008 and refocusing employment support into the soon-to-end Work and Health Programme in 2017. However, policy successes have been limited. There are now more people out of the workforce due to ill health than at any point in at least 30 years. 

Numbers on health-related benefits are expected to rise further by 1.2 million people by 2028/29. While this will be a core pressure on public finances and a challenge for the Department for Work and Pensions, it is also a longer term risk to the economy and people’s quality of life. 

Rising benefit bills to an extent reflect historical failure in the implementation of benefit policies and a failure to maintain the health of the working-age population. The introduction of Employment Support Allowance (followed by its translation to Universal Credit) aimed to increase employment of people with long-term health conditions, while Personal Independence Payments were intended to reduce disability benefit spending. In fact, the opposite has happened. Experience suggests policies that aim to generate significant short-term savings are at high risk of not doing so, potentially creating wider costs by risking a rise in poverty that can cause a further deterioration in health. 

Action taken by government over recent years is unlikely to lead to a significant improvement in employment outcomes. Practical support for people out of the workforce is relatively small-scale and is being introduced gradually over several years. The government also announced plans to change eligibility to some health-related benefits by reforming the Work Capability Assessment. The most immediate changes are expected to make 424,000 people who would have been receiving the health-related element of Universal Credit poorer, but increase employment by only 15,400. This is an approach that risks being counterproductive in the longer term by increasing the number of people at risk of poverty with implications for people’s health.

The type, severity and number of conditions affect labour market participation

Figure 2 shows labour market participation rates (being either in work or actively seeking work) of working-age people by their reported main health condition, categorised by whether they consider their condition to be work-limiting and if they have one to three other conditions, or four or more other conditions. It shows that the type of health condition, its severity, and the presence of multiple conditions all significantly impact labour market participation.

People who report a long-term health condition but do not consider it work limiting have similar participation rates (89.7%) to those who report no health conditions at all (88.6%). In contrast, those who identify their health condition as work limiting have significantly lower participation rates (67%). For people with one to three additional health conditions participation rates fall further (to 51% for any condition), and further still for people with four or more conditions (31%). 46% of people who are economically inactive with one or more work-limiting health condition have up to three additional conditions; 29% have four or more.

The extent to which work-limiting health conditions affect labour market participation varies, highlighting the need for tailored support. People who report work-limiting neurological disorders, mental health or musculoskeletal conditions as their primary health condition tend to have the lowest labour market participation rates regardless of how many conditions they have.

People with chronic conditions, as grouped in the data (see note below), have higher labour market participation rates (59%). While many chronic conditions can significantly impact quality of life, their lesser relative impact on labour market participation may be due to the availability of effective and non-invasive management options, such as medication or changes in diet and exercise. 

Since 2013, the prevalence of work-limiting mental health conditions has almost doubled, rising from 2.5% to 4.8% based on our analysis of the Labour Force Survey. Work-limiting mental health conditions are now almost as prevalent as musculoskeletal conditions (5.1%) among working-age people. Together, mental health and musculoskeletal conditions are the main issues reported by over half (52%) of working-age people who are out of the labour market with a work-limiting health condition. 

Mental ill health and co-morbidity are rising among working-age people

Alongside an ageing population, a key driver of more people being out of the labour market is the increased prevalence of work-limiting health conditions. Our previous analysis, using data from the Labour Force Survey, identified sharp rises in mental ill health over the past decade, particularly among younger people in the workforce. The analysis also showed that the change in prevalence is primarily driven by more people reporting health conditions rather than the working-age population getting older. 

While the Labour Force Survey is a key source of information on the link between health conditions and the labour market, there have been concerns about the quality of recent data due to issues with sampling and response rates. Health conditions in the survey are also self-reported rather than clinically diagnosed, and isolating specific conditions is challenging due to the categories used during data collection. For these reasons, it is useful to validate Labour Force Survey-based trends using estimates from health records, as these help to provide a more complete picture. 

Figure 3 shows changes in the estimated prevalence of the most common health conditions identifiable from health records among the working-age population. This data, derived from the Clinical Practice Research Datalink and Hospital Episode Statistics, covers England only and is limited to the period up to 2019. As the data are based on attendances at GP and hospital settings, there is a significant interruption in the data from 2020 onwards where access to routine health appointments was curtailed by the COVID-19 pandemic. Nevertheless, it provides a useful comparison for trends up to the start of the pandemic. 

According to these estimates, the biggest increase in prevalence during the pre-pandemic period was among people experiencing depression and anxiety, rising from 6% to 11% of the working-age population in England between 2008 and 2019. There have also been moderate increases in hypertension, IBS, diabetes, hearing loss and asthma, alongside a small rise in cancers. Our analysis has also shown that trends in depression and anxiety and chronic pain from this data follow trends in equivalent categories from the Labour Force Survey, although estimates of chronic pain prevalence based on health system data may underestimate the true value (as the availability of pain medication over the counter means that treatment might not show up in patient health records).  

The rise in clinically diagnosed depression and anxiety is particularly significant as this is among the conditions with the biggest impact on people’s capability to work.

Our analysis of health records also highlights the role of multimorbidity. The share of the working-age population in England living with two or more of these long-term health conditions grew from 16% to 20% between 2008 and 2019, equivalent to an additional 1.8 million people. This rise in co-morbidity was observed across all age groups, indicating it was not solely due to population ageing. As shown in Figure 2, multimorbidity is associated with greater risk of being out of the workforce. 

Linking health, employment and benefit records would significantly improve our understanding of health and employment trends. This would help to better target policies, particularly given the increasing complexity of health need. Doing so should be a priority for the new government. 

The age and health of the in-work and out-of-work populations have changed 

The prevalence of health conditions has shifted across different age groups among the working-age population. Figure 4 shows that mental health conditions are among the most prevalent health issues across age groups, regardless of people’s employment status.

The fastest rise in work-limiting mental health conditions has happened among younger age groups. Between 2013 and 2023, the share of labour market inactive 20–34-year-olds reporting a work-limiting mental health condition more than doubled, from 7.1% to 16%. For 20–34-year-olds in employment, 3.3% reported a work-limiting mental health condition in 2023, compared with just 0.8% in 2013. 

Among 50–64-year-olds who are out of the workforce, 9.3% reported a work-limiting mental health condition in 2023, compared with 6.7% in 2013. This means approximately 100,000 more 50–64-year-olds report work-limiting mental health than a decade ago. This reflects a steadily rising pre-pandemic trend that has been exacerbated by the pandemic. 

The rise in mental health conditions, especially among younger people, suggests that a greater share of the working-age population will have fluctuating health needs in future, with a risk of recurrence later in their working lives and beyond. Notably, both the Statutory Sick Pay system and the welfare system have been criticised by recipients for not being well adapted to support people with mental health or other fluctuating health conditions. 

The increased number of people in work with a work-limiting health condition presents both a longer term risk more people will fall out of the labour market in future, but also impacts productivity in the short term. The ‘health pay gap’ for full-time workers means that people with a work-limiting health condition earn 15% less on average per hour. This partly reflects that people with work-limiting conditions are underrepresented in professional and managerial roles.

In the UK 186 million days of sickness absence were taken in 2022, 58% taken by those with long-term health conditions, despite this group forming only 31% of the employed population. However, this understates the full impact of ill health on business performance. Presenteeism, in which an employee with poor health is less productive at work, is estimated to be around double the cost of absenteeism. There will be some instances where presenteeism is a positive part of recovery, such as a returning to work after a period of ill health, where productivity is temporarily reduced. ‘Dysfunctional presenteeism’ has been found to be more common among smaller employers and those outside the public sector. This illustrates the need for all types of employer to provide workplace support to help keep employees healthy.

At the same time, rising multimorbidity points towards a workforce with increasingly complex needs, which is likely to require tailored approaches and result in greater variability in overall health and work capability. 

People with lower qualifications are at greater risk of worse health and labour market outcomes 

Figure 5 shows the number of people with work-limiting health conditions who are in employment or economically inactive by their highest qualification level. 21% of people with a highest qualification at Level 2 (equivalent to a GCSE at Grade 4/C or above) or lower were labour market inactive and had a work-limiting health condition. This has risen from 15% in 2013, reflecting a higher risk of being inactive with a work-limiting health condition for younger people, as well as a larger older population who have a lower level of qualifications on average. There are now 210,000 20–25-year-olds inactive due to long-term health conditions, of which 78% have level 2 or under qualifications. Higher levels of qualifications also tend to reduce the likelihood of people with a long-term health condition leaving work, likely in part to relate to the types of work they can access.

People with no or low qualifications tend to find it harder to move into employment because their qualification level can signal a lower level of skills to employers. These barriers are likely to increase when combined with a long-term health condition, particularly if available roles are likely to exacerbate the health issue. For example, work requiring manual labour could be unsuited to someone with a musculoskeletal issue; or a role with varying and unpredictable hours could exacerbate an existing mental health condition. 

Ill health and health-related inactivity also vary significantly by geography and socioeconomic status. For instance, local areas in England with the highest prevalence of work-limiting disability include Hastings, Hyndburn and Blackpool, which also have some of the highest levels of deprivation in the country. Barriers to work and health vary locally, suggesting a tailored approach is needed to effectively support people back into work and to help people remain in work in the first place. More also needs to be done to better coordinate the support available to individuals from different local services. 

The areas with the highest economic inactivity due to ill health tend to be more deprived, highlighting the link between poor health and economic disadvantage. Without action to address the causes and impacts of rising ill health, these areas are at risk of falling even further behind.