According to the latest official figures, more than one in five working-age adults in the UK is currently not working or actively seeking employment.
Data from the Office for National Statistics (ONS) shows that the economic inactivity rate stood at 21.5% in the three months to January. This figure is slightly lower than last year’s previous quarter and the same period. While still elevated compared to historical norms, the rate is relatively low when viewed against the long-term trend since 2009.
The Government has emphasised reducing economic inactivity as part of wider plans to boost the UK’s economic growth.
Government reforms spark debate
The figures’ timing is significant, as they come shortly after the announcement of major reforms to sickness and disability benefits and just ahead of Chancellor Rachel Reeves’s Spring Statement.
In March, ministers unveiled plans to cut sickness and disability benefits, aiming to save £5 billion annually by 2030. The government argues the changes will support those who can work while continuing to protect the most vulnerable.
However, the plans have drawn sharp criticism from Labour backbenchers, trade unions and disability rights organisations, who warn the reforms could push more disabled people into poverty.
Work and Pensions Secretary Liz Kendall acknowledged the scale of the issue, stating that the employment data “demonstrate the scale of the challenge we’re still facing to get Britain working again.”
Labour has set a target of increasing the employment rate to 80%, up from its current level of 75%.
One of the key voices contributing to the debate is Sir Charlie Mayfield, former chairman of John Lewis, who is leading the Government-commissioned Keep Britain Working review. He has stressed the role of employers in creating inclusive workplaces that support individuals with health conditions or disabilities.
“Employers need to create the environment so people can talk about the help they might need,” he told the BBC, adding that the system should shift focus from what people can’t do to what they can. “Being off work is not always the solution,” he said.
Health conditions and long-term inactivity
The review found that 8.7m people in the UK now live with a work-limiting health condition – an increase of 2.5m over the past decade. This includes 1.2m people aged 16 to 34 and 900,000 aged 50 to 64.
The research also highlights the importance of early intervention. Those who have been out of work for less than a year are five times more likely to return to employment than those who have been out of work longer.
The ONS has urged caution when interpreting its latest employment figures due to lower survey response rates. However, it confirmed that economic inactivity has generally declined since records began in 1971.
Around 9.27m people in the UK are classified as economically inactive. This includes those not working or looking for work due to long-term sickness, studying, early retirement, or caring responsibilities.
Economic inactivity rose during the Covid-19 pandemic and has remained high since. However, it has shown signs of improvement in the past year, with the rate falling 0.6% over the year and 0.2% in the most recent quarter – primarily due to more people aged 35 to 49 seeking work.
In other labour market trends, wages continue to outpace inflation. Regular pay, excluding bonuses, rose by 5.9% compared to last year’s period, with particularly strong growth in retail, hospitality and construction.
Adjusted for inflation, regular pay increased by 2.2% in real terms.
Meanwhile, redundancies rose for the first time in a year, reaching 124,000 in the three months to January.
The Bank of England monitors these pay and employment trends closely as it considers future interest rate decisions. The Bank recently held its base rate steady at 4.5%.
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