Lost workforce of more than six million costs UK economy £455bn

A “lost workforce” of more than six million people is costing the UK economy almost £455 billion a year in output, according to a new report that calls for a more inclusive labour market to tackle the rise in worklessness.
Research sponsored by Tesco, the supermarket that is Britain’s largest private sector employer, and carried out by the Social Market Foundation, a think tank, estimates that about 14 per cent of Britain’s working age population is not in a job but would like to join the workforce.
This cohort includes 1.86 million unemployed who are actively looking for work and also more than four million others who are deemed to be economically inactive but would want a job if their circumstances were different. This latter group encompasses a diverse range of people from carers and the retired to the disabled and sick, as well as individuals who have recently lost their job.
Three-quarters of this so-called lost workforce do not have a degree and 55 per cent come from households with annual incomes of less than £25,000, the foundation found. They are also more likely to struggle with the skills needed to apply for jobs, including writing CVs and interview techniques.
Yet getting them back into employment would lift the UK’s gross domestic product by £454.9 billion, or 16.9 per cent, the think tank estimated.
“It’s probably one of the biggest drags on the economy,” Ken Murphy, the Tesco chief executive, said. “It’s all connected: People who are busy and in work and feeling good about themselves and contributing to society, all of a sudden become stakeholders in society.”
He said Tesco, which is Britain’s biggest retailer with more than 300,000 staff, will help to tackle the problem.
Throughout November it will run free career clinics for the public, specifically in areas that are worse off, to help more than 1,000 people gain the skills and confidence needed to find a job. People who attend these clinics will be guaranteed an interview for a role with Tesco over the festive season, when it will hire an additional 25,000 temporary workers to cover the busiest time of the year for the supermarket.
It has also overhauled its recruitment processes in recent years, including scrapping the need for CVs for front line roles.
“We feel that we play a very important role in the jobs market,” Murphy said. “In particular, we help a huge amount of young people on the first step of their working lives, we’re usually, for many of them, their first job. We teach them how to get out of bed on time in the morning, how to work in a team, and more importantly how to think about customer service.”
Worries have grown in recent years about the UK’s shrinking workforce as long-term illness amid lengthy NHS waiting lists and a rising number of people struggling with mental health challenges keep individuals out of employment.
Research released on Wednesday by the Commission on the Future of Employment Support found that 800,000 people had dropped out of the UK’s labour market since the coronavirus crisis, the fastest rate of decline since the 1980s.
The new Labour government has pledged to tackle the issue by setting itself an ambitious target of getting 80 per cent of working age people into employment. The Social Market Foundation said this means getting two million people into employment, which would lift economic output by an estimated £151 billion.
Jake Shepherd, a senior researcher at the think tank and co-author of its report, warned that “the lost workforce is often overlooked by standard definitions and metrics”.
“By ignoring this group, the government misses a significant chance to boost employment and achieve its 80 per cent employment target,” he said.
The foundation suggested a series of steps to make the labour market more inclusive and help these people into work, including the introduction of a national job and training guarantee program.
“This would ensure that every person seeking employment can be provided with education, training, or a paying job,” it said. Other measures include widening access to work placements and improving the careers guidance on offer to students and those out of education, the think tank recommended.