More workers are leaving the workforce since the pandemic. The Chancellor is reportedly focussing the March 15th Budget on reducing the amount of people on sickness related benefits and boosting employment, amid growing concern about record numbers of people on long-term sickness and the effect of declining labour force participation on economic growth.

‘Sick-note Britain’: the sticking plaster response? The government’s mooted response is a classic mix of carrots and sticks, most of which are targeted firmly at the symptoms rather than the causes of this issue. The Telegraph reports that the government is considering “a new approach to how GPs decide whether people are too sick to work” and telling doctors to “sign fewer people off work with sick notes and instead help them to remain in employment under plans being considered for next month’s Budget.” Other ideas under consideration to encourage older people back to work are: putting work coaches in GP surgeries so doctors can refer older patients who express interest in getting a job to them for advice, giving early retirees financial advice “with many set to be told that they do not have enough cash to see them through life” and encouraging pension companies to offer more ‘mid-life MoTs’. But is this the best way to stop people leaving the workforce? (The Resolution Foundation's Torsten Bell explains why the government's ideas won't work.)

  • NHS crisis. One solution which seems to be firmly in the ‘too difficult box’ is actually fixing the crisis in the NHS, and particularly with waiting lists for elective surgery, which lie behind some of these numbers. For economic arguments about how increasing investment in the NHS can reduce long term sickness and increase participation and productivity in the economy, read our previous Digest on reducing the NHS backlog
  • Elephant in the room. Another issue which is off the table for now is any serious attempt to reform the UK’s migration system in order to encourage more economic migration. Again, this is an issue we have covered previously in our Digest on the economics of migration post-Brexit.
  • All about tax. The Resolution Foundation has proposed a solution firmly in the ‘stick’ category this week, urging the government to scrap lucrative tax breaks which they argue are causing workers to seek early retirement. They make the point that these tax breaks are highly regressive, and make it much less attractive for wealthy older workers to stay in work.

What about work itself? Often missing from this debate on workforce participation is any consideration whether work itself might be part of the problem. With workers often being asked to work longer hours, for less real terms pay, and fewer employment protections than previously, it is surely worth considering whether the focus should be trying to improve the experience of work, rather than attempting to nudge reluctant workers back into jobs that make them ill or unhappy. Perhaps the most transformative proposal in this space is the campaign for a four day working week, which has released some new data this week. Surveys have shown “consistently” growing public support for a four-day week since the beginning of the pandemic. So could reducing the length of the working week be an innovative solution to falling workforce participation?

Weekly Updates

Climate change

Climate ‘doom loop’. Societies are in danger of entering a ‘doom loop’ in which the resources needed to tackle climate change’s root causes are diverted towards dealing with its consequences, according to a new report by the IPPR and Chatham House. The report, by Laurie Laybourn, Henry Throp and Suzannah Sherman, argues that a “challenging conversation” on this “strategic risk” is needed, and explores how politics, policy and analysis can create an agenda for addressing the challenge.


TUC Spring Budget submission. The TUC has written a submission ahead of the Chancellor’s Spring Budget next month which calls on the Chancellor to deliver “real terms pay rises” and to invest in public services. It also suggests increasing the minimum wage to £15 per hour, cancelling the energy price hike expected in April, and introducing higher taxes on excess profits and capital gains ensuring that “those with the broadest shoulders pay their fair share in this national effort”. 

Wage-price spiral? The argument that public sector pay demands would lead to a wage-price spiral if implemented is flawed, argues Josh Ryan-Collins of UCL’s Institute for Innovation and Public Purpose. Ryan-Collins argues that not only is this analysis incorrect - with evidence suggesting that inflation pressures stem from other sources such as a “profit-price spiral” - but that increasing public sector wages would have economic benefit in the form of alleviating the public sector staff shortage. 


Repurposing private rented housing. Housebuilding alone is not enough to solve the housing crisis, argues NEF’s Alex Diner. Policy should also address the huge outflow of homes from the social sector by “acquiring and repurposing” private rented homes for social rent, Diner argues. 

Industrial strategy

Seizing the “interventionist moment”. Keir Starmer’s Labour Party must learn from the “new economic order” as seen in the US and EU and reject Rishi Sunak’s “unashamedly free-market” approach, argues James Meadway. The US’s Inflation Reduction Act and the EU’s Green Deal Industrial Plan are examples of how, globally, we are seeing a shift towards “heavy government intervention”, Meadway argues, which the UK has been “left on the wrong side of”. 


Record number depending on foodbanks. 90% of foodbanks reported an increase in demand in December 2022 and January 2023 compared to the previous year, according to new data from the Independent Food Aid Network. The research also found that over 80% of food aid providers reported a “significant number of people needing help for the first time” and half of the organisations surveyed said that “if demand increased, they would have to reduce the level of support they could provide or turn people away”.