Chancellor Rachel Reeves is set to announce measures in the Spring Statement aimed at reducing the welfare bill by tightening eligibility for certain benefits. The government hopes this will encourage some of the 11 million working-age people not in employment to rejoin the workforce.
According to the Office for National Statistics (ONS), unemployment stood at 4.4% between October and December 2024, affecting about 1.6 million people. While this has risen over the past two years, it remains low historically. However, the unemployed represent only a fraction of the 11 million working-age adults without a job, with 9.4 million classified as 'economically inactive'—not seeking or available for work.
Among the inactive, 1.6 million say they want a job, but there are only 0.8 million vacancies, a number that has been falling. The main reasons for inactivity vary by age: most under-25s are students; among 25- to 49-year-olds, caring responsibilities (nearly 1.1 million, mostly women) and illness (over 1 million) dominate; and for over-50s, illness and early retirement are key. Few early retirees want to return to work.
People with disabilities face particular challenges: around half are without a paid job, more than double the rate for the rest of the working-age population. Less than a quarter of those who are sick or caring say they want a job. The government argues that a smaller workforce reduces tax revenues and High Street spending, harming businesses and the economy.
The UK's workforce shrank during the pandemic and has not recovered as in other major economies. The Office for Budget Responsibility notes that ill-health has been a bigger factor in the UK than elsewhere. Last week, Work and Pensions Secretary Liz Kendall announced welfare reforms making it harder for people with less severe conditions to claim disability payments.
