Fixing Britain’s worklessness crisis will cost employers £6bn a year, report says | Business

Employers have been told in a landmark government review that to tackle Britain’s health-related unemployment crisis they will need to spend £6 billion a year supporting their staff.

In a major report released ahead of this month’s Budget, Charlie Mayfield warned that businesses must play a more central role in tackling the growing wave of health problems that is pushing millions out of work.

The former chairman of John Lewis, who was appointed by ministers to lead the government’s Keep Britain Working review last year, said a drastic expansion of workplace health was needed to prevent hundreds of thousands of people leaving the workforce each year.

“We need to fix this,” Mayfield told the Guardian. “What we are proposing is a fundamental reset of how health is managed in the workplace. We are saying we need to move from [a] situation where, for most people, health belongs to the individual and the NHS – we need to move from this position to one where health becomes a true partnership between employers, employees and the wider health service.

“This is not a small gesture, but a big step and a fundamental change. »

Ministers are increasingly alarmed by the dramatic rise in the number of working-age adults who have left the job market due to ill health in recent years, with young adults driving much of the increase.

Nearly one in five adults of working age – or more than 9 million in total – are now in a situation described by statisticians as “economically inactive”, in which they are neither holding a job nor looking for one. For almost 3 million people, the main reason is long-term illness – the highest level ever recorded.

In his much-anticipated report, Mayfield said the overall cost to the UK economy of this “silent but urgent crisis” was £85 billion a year, a major blow to the exchequer, businesses and individuals.

Ministers focused on reducing a sharp rise in the cost of health-related social care. The report said the cost of economic inactivity due to poor health was “unsustainable” for the state, through lost output, increased welfare spending and additional burdens on the NHS.

However, the aim of the Mayfield report is to combat rising costs by helping individuals retain their jobs through a significantly improved workplace support system.

He said a new approach to workplace health was needed, in which responsibility would be shared between employers, employees and government to help reduce sickness absence rates, improve return to work rates and increase the employment rate of people with disabilities.

The report reveals a potential benefit of up to £18 billion a year to the economy and the Treasury if the recommendations were implemented across the entire workforce.

The Government said more than 60 employers – including well-known names such as British Airways, Nando’s and Tesco – would follow Mayfield’s recommendations as part of a pioneering program over the next three years.

He said the programme, which also involves regional mayors and dozens of small businesses across the country, would act as a pioneer in developing stronger approaches to workplace health.

Asking businesses to take a more proactive approach, however, could prove controversial at a time when business groups have sounded the alarm that Labour’s tax changes and employment policies have made it harder to recruit staff.

Bosses have warned Chancellor Rachel Reeves against any tax increases on businesses in her Budget on November 26, following her £25 billion increase in employer National Insurance Contributions (NICs) last year.

Mayfield acknowledged businesses were facing a challenging environment, but said they could see the benefits of investing in employee health and that increasing provisions was a “win-win” for businesses and the economy as a whole.

“Employers must lead by example. Some might resist this message in a context of tight margins and slow growth. But many already recognize that they bear the cost of poor health every day,” he said.

Its report recommends that businesses are likely to face a cost of £5 to £15 per employee per month to improve health levels at work – at an annual cost of around £6 billion when spread across the economy.

For some businesses, this would mean a big increase in expenses. However, others, notably large employers, already spend significant sums on workplace health.

Over time, Mayfield said he envisions workplace health programs offered by employers being government certified, integrated into the NHS app and reducing – or even replacing – the need for fitness grades issued by healthcare professionals.

Among other recommendations, Mayfield’s study also calls on ministers to consider incentivizing businesses to invest in workplace health through tax cuts and reductions in sick pay payments to employees.