Welfare cuts won’t succeed without healthier jobs

The UK could be poised to cut billions of pounds from its welfare spend as the Treasury takes the view that there is less room for manoeuvre in the finances than hoped. Only last October, Chancellor Rachel Reeves believed she had almost £10 billion of so-called “fiscal headroom”, essentially a buffer in her budget if the economy changed. But things have changed very quickly for Reeves.

Welfare spending in the UK is around £50 billion a year – and predicted to rise to more than £75 billion by 2030. Regardless of other pressures, the government had already been expressing concern about the size of the bill, even attempting to make a “moral case” for ensuring people who can work are doing so.

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But none of this gets around the fact that the UK has been dubbed the “sick man of Europe”. The rise in health-related economic inactivity since COVID – people leaving the workforce because they’re too ill – has certainly attracted widespread political attention. Some commentators have recently challenged the narrative however, pointing to differences in how economic activity is measured in other countries.

We have researched the reasons why British workers leave their jobs after their health declines. When deciding whether to make cuts, the government should try to understand what is really happening with the health of the UK workforce.

The overall picture is stark. More working-age people have a diagnosed major health problem than ever before and numbers are due to rise by 500,000 by 2030. Improvements in life expectancy have stalled and regional differences in health are large and growing.

Almost one in four working-age people are classed as disabled, a diverse and growing minority. Meanwhile mental ill health rates are rising, particularly among young people.

Poor work quality is one of the things that is harming health in many ways. Long hours, shift work and work-related stress all take their toll.

In 2023-24, half of all UK work-related ill health was due to stress, anxiety or depression. Ultimately a bad job can be worse for health than no job.

These problems are not unique to the UK. Other countries are grappling with similar issues but have been quicker to respond, including with high-quality occupational health systems and specific legislation around work-related “psychosocial risks”.

These are factors like workloads, long hours, a lack of autonomy and support at work and workplace harassment. The UK has been slower to grasp the nettle and act.

Our recent study explored why British workers quit their jobs following a decline in their health. We surveyed 1,117 business leaders, reviewed occupational health approaches and studied the employment journeys of 9,169 workers aged 16-60 over a four-year period.

We found that nearly one in ten employees (9%) who experienced a decline in their health left their job within four years. Critically, nearly half of these exits were in the first 12 months, suggesting that once sick pay entitlements run out, people who have not recovered may face little choice but to quit and enter the welfare system.

Workers grappling with multiple health challenges face even greater risks. Those with three or more conditions are 5.6 times more likely to quit work than their healthier peers. And those with poor mental health are almost twice as likely to leave.

The role of healthy ‘job design’

Our study found that workers without flexibility were four times more likely to leave after their health declined. And for those with low levels of control in their job, the risk was 3.7 times higher.

A previous study found that people in insecure work, for example through a temporary or zero-hours contract, become workless at higher rates when their health deteriorates.

Despite the fact that job design can determine whether people stay in work, in the UK it has largely been left to employers to decide the types of jobs and protections they offer. This hands-off approach to workforce health is what sets the UK apart – and not in a good way.

In the Netherlands, employers carry the financial burden for statutory sick pay for up to 104 weeks. This has motivated them to help people return to work by adapting their jobs. In Australia, employers have to implement return-to-work programmes, assisted by regional coordinators.

Our survey of UK business leaders revealed that while 64% recognise the economic impact of poor employee health, only 48% offer flexible working arrangements. And just 37% provide occupational health services. They acknowledged several workplace factors that exacerbate problems, such as excessive workloads (75%), long working hours (73%) and a lack of breaks (74%).

But implementation of preventive measures is low. Only 36% assess mental health risks and 37% adjust workloads to ensure they are manageable.

The state pension age is set to rise to 67 by 2028 and potentially to 71 by 2050, meaning more people may have to work for longer. Yet, as people live and work longer they are also becoming sicker.

In this context there is an urgent need to promote healthy, sustainable work. This means achieving living and working conditions that can be sustained across a lifetime. It requires a joined-up employment and welfare system that supports people to take breaks when they need to, such as for health-related and caregiving needs.

Practical measures include raising statutory sick pay and ensuring working time protections and flexible work rights mean everyone has a healthy work-life balance.

Government must also legislate to ensure that employers take steps to address known work-related causes of ill health.

The UK government’s Get Britain Working agenda aims to support inactive people, including those with long-term illnesses, back into suitable work. And the employment rights bill should strengthen worker protections. But these changes will take time. Cutting welfare now will affect hundreds of thousands of people who are out of work on health grounds, and do not have a viable alternative.

Britain’s welfare bill is not about sudden mass exits from the workforce but rather a steady drip of workers leaving, compounded by insufficient protections and workplace insecurity. With a growing population of older workers and rising health challenges, guaranteeing good-quality work is no longer optional for the UK — it is essential.