A long-term illness crisis is threatening the UK economy

A long-term illness crisis is threatening the UK economy

A queue of ambulances outside the Royal London Hospital emergency department on Nov. 24, 2022, in London. In the U.K., the number of “economically inactive” people — those neither working nor looking for a job — between the ages of 16 and 64 rose by more than 630,000 since 2019.

Leon Neal/Getty Images

LONDON — Along with sky-high inflation and energy costs, a Brexit-related trade tailspin and a recession in progress, the U.K. economy is being hammered by record numbers of workers reporting long-term sickness.

The Office for National Statistics reported that between June and August 2022, around 2.5 million people cited long-term sickness as the main reason for economic inactivity, an increase of around half a million since 2019.

The number of “economically inactive” people — those neither working nor looking for a job — between the ages of 16 and 64 has risen by more than 630,000 since 2019. Unlike other major economies, recent U.K. data shows no sign that these lost workers are returning to the labor market, even as inflation and energy costs exert huge pressure on household finances.

The U.K. avoided mass job losses during the Covid-19 pandemic as the government’s furlough program subsidized businesses to retain workers. But since lockdown measures were lifted, the country has seen a labor market exodus of unique proportions among advanced economies.

In its report last month, the ONS said a range of factors could be behind the recent spike, including National Health Service waiting lists that are at record highs, an aging population and the effects of long Covid.

“Younger people have also seen some of the largest relative increases, and some industries such as wholesale and retail are affected to a greater extent than others,” the ONS said.

Though the effects of the issues mentioned above haven’t been quantified, the report suggested the increase has been driven by “other health problems or disabilities,” “mental illness and nervous disorders” and “problems connected with [the] back or neck.”

Legacy of austerity

“The government clearly isn’t doing very much about this. Apart from resolving the crisis in the NHS, the other key policy area is support for sick and disabled people to get back to work, and there’s not nearly enough happening on this — instead the government is harassing people on Universal Credit with penalties and sanctions which we know don’t help much.”

In his recent Autumn Statement, Finance Minister Jeremy Hunt announced that the government will ask over 600,000 people receiving Universal Credit — a means-tested social security payment to low income or unemployed households — to meet with a “work coach” in order to establish plans to increase hours and earnings.

Hunt also announced a review of the issues preventing re-entry into the job market and committed £280 million ($340.3 million) to “crack down on benefit fraud and errors” over the next two years.

Although the pandemic has greatly worsened the health crisis leaving a hole in the U.K. economy, the rise in long-term sickness claims actually began in 2019, and economists see several possible reasons why the country has been uniquely vulnerable.

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Portes suggested that the government’s austerity policies — a decade of sweeping public spending cuts implemented after Former Prime Minister David Cameron took office in 2010 and aimed at reining in the national debt — had a significant part to play in leaving the U.K. exposed.

“The U.K. was particularly vulnerable because of austerity — NHS waiting lists were rising sharply, and performance/satisfaction was falling sharply, well before the pandemic,” Portes said.

“And support for those on incapacity and disability benefits was hollowed out in the early 2010s. More broadly, austerity has led to a sharper gradient in health outcomes by income/class.”

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