The cost of economic inactivity due to sickness absence and other ill health is likely to be at least £240bn per year but could be as much as £330bn, according to the Department for Work and Pensions (DWP).
Lost output due to sickness absence alone was estimated to be costing the economy between £38bn and £56bn, and this does not include an estimate of the impact of health on productivity at work.
Meanwhile, the DWP estimates that around 544,000 working age carers were unable to work due to their caring responsibilities and this was costing a further £37bn in productivity.
It added that each individual with health problems that becomes inactive adds an additional £910 expense to the NHS, with this amounting to around £2bn per year.
However, the largest cost is through economic inactivity from lost output due to working-age ill-health which prevents work, which is estimated to total between £127bn and £188bn.
Economic cost of working age ill-health
The analysis, based on data from 2022, has been published the same week as the Labour government unveils major changes to disability benefits and key parts of its plan to get Britain working.
“In total, the cost to the economy of working age ill-health and disability that prevents work in 2022 is estimated to be between £240-330bn,” the DWP said.
It added that the estimates can be regarded as the difference between current economic output, and the potential economic output if working age health conditions were not limiting or preventing work.
“This does not assume that all health issues could be resolved when entering work, rather that ill-health is no longer a barrier to work,” it continued.
“The figures provided are not intended to provide a realistic view on the benefits that can be achieved by specific interventions but are illustrative of the cost to the economy and individuals of working age ill-health.”
Role of protection sector
Commenting on government’s measures announced earlier in the week, Chris Morgan, head of product and proposition strategy, protection at Canada Life said: “While there is a lot to digest from the Pathways to Work Green Paper announcement, it’s encouraging the DWP recognises work is good for our health – whether that’s full-time, part-time or flexibly – and that employer support plays an important role.
“The group protection sector has a wealth of lived experience to share through its first-hand support of employers and people who experience ill-health.
“What we regularly see is the value that prevention and tailored early intervention, as well as a welcoming return-to-work environment, has on a person’s physical and mental health following an illness or disability.
“There isn’t a silver bullet but it’s vital we create inclusive workplaces where people with health conditions feel supported, fulfilled and have purpose.
“Because the reality is people are living longer and will likely need to work for longer, potentially while they live with one or more health conditions.
“Redesigning life to embrace longevity and the work ambitions of all age groups is a conversation and societal shift that we need to embrace.
“It’s important individuals, employers, workplace experts and policymakers collaborate and share experience if we’re to achieve this change.
“More details of how employers can play a role will follow later in the year when the Keep Britain Working Mayfield Review is published.”
Rebalancing benefits system
While welcoming government’s measures to rebalance the benefits system, David Finch, assistant director at the Health Foundation, said cuts to disability benefits risk undermining this new approach.
“Providing more support when people first leave work and realigning incentives to help people back to work is an important step forward,” Finch said.
“So, we are pleased to see that the Green Paper takes forward several recommendations aligned with the Health Foundation’s Commission for Healthier Working Lives, which launched its final report, Action for healthier working lives, last week.
“Introducing a new contribution-based unemployment insurance benefit and replacing the Work Capability Assessment (WCA) with a ‘support conversation’ could provide more people with early financial and practical help to return to work.
“Additionally, the ‘right to try’ guarantee – allowing people on health-related benefits to try working without fear of having their benefits reassessed – will encourage more people to re-enter the workforce.
“However, cutting benefit entitlements by reforming PIP eligibility and reducing entitlements for new Universal Credit health claims will leave vulnerable people worse off and risks making it harder for people with health conditions to move into work.
“The government has stated that it aims to restore trust in the benefits system, but this will be challenging with proposed cuts to benefits that will leave many people facing anxiety, financial insecurity and at risk of worsening health.”
