The new Government has set an ambitious target to raise the employment rate to 80% – which would represent an increase of approximately 2.4 million more people in work than today. Achieving this target is critical to the Government’s wider goals of growing the economy, balancing the public finances and improving living standards across the country.

However, in reality, the UK faces a number of health-related workforce challenges that will make realising this ambition particularly difficult. Since the beginning of 2020, the number of people who have left the labour market altogether due to long-term illness has risen by 671,000, and now sits at a near record 2.78 million. At the time of publication, the UK remains the only G7 country with a smaller workforce than before the Covid-19 pandemic.

And while the pandemic may have accelerated the rate at which people have left the labour market during this period, evidence suggests that the decline in health among the working age population is a longer-term trend that will continue.

In response, the Government has launched a new ‘Get Britain Working’ White Paper, with a primary focus on boosting support and work incentives for those who have fallen into economic inactivity – including interventions for those with long-term illnesses and a review to understand how employers can support workers to stay in employment. But until the Keep Britain Working Review reports in Autumn 2025, there remains a significant policy gap as to how to stem the flow of those leaving work due to ill health in the first place.

This study aims to provide new evidence, insights and policy direction for how Government and employers can work together to help retain more people who experience health issues in employment. It features a longitudinal analysis of the employment journeys of 9,169 workers aged 16-60 from 2017/18 to 2021/22 using the Understanding Society dataset to shed light on who is leaving the labour market due to ill health and factors that influence the risk of falling into economic inactivity. It also draws on a survey of over 1,000 senior business leaders across Great Britain and roundtable discussions with employers and policymakers on the challenges and opportunities to support healthier working lives.

Key findings include:

• Nearly one in ten employees (9%) who had experienced a decline in health had left the labour market by the end of the four-year period. Almost half of those employees had left work within the first 12 months, when 4.2% people left their job following a health decline
• Workers with multiple health conditions are especially vulnerable to the risk of early workforce exit, with those with three or more conditions being 5.6 times more likely to leave work than those without a health condition or disability
• Employees with poor mental health are nearly twice (1.9 times) as likely to leave work following the onset of illness than those who report good mental health
• Two-thirds of senior business leaders (64%) said poor employee health had a detrimental effect on their organisation’s economic performance, with 44% identifying absenteeism due to ill health as a serious issue
• Workers without any flexibility are four times more likely to leave work after a health decline, while those with low levels of control over working hours, pace, tasks, order and work manner are 3.7 times more likely to exit
• For women who experience ill health, a lack of control over the order of tasks increases their likelihood of leaving employment by 2.4 times. For men, control over how they perform tasks is even more important – those without it are five times more likely to leave work.

Recommendations:

• Ensure the Employment Rights Bill enshrines secure and flexible working from day one of employment
• Revise the Health and Safety at Work etc Act 1974 to reflect current modern workforce challenges, including psychosocial risks and mental health issues, and enhance enforcement of mental health risk assessments and preventive measures
• Lead a strategic transformation of occupational health services focused on improved and extended coverage for all workers, with mandatory provision by large employers
• Establish a UK-wide network of one-stop workforce health hubs, offering funded SME services and integrated with public health initiatives
• Strengthen and increase Statutory Sick Pay (SSP) to promote retention and enable a phased return to work
• Examine the practicalities of extending the duty of care for employers, subsidising the cost of long-term sickness absence, and incentivising vocational rehabilitation.

Read the full briefing here.

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