Written by:

Victoria Winckler
Director
The Bevan Foundation

 

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Across Wales employers of all kinds are struggling to recruit. In the last few weeks alone, I have heard of difficulties faced by large public bodies, small charities and well-known businesses alike. So what’s going on?

Employers often have their own explanations of why they can’t recruit, particularly if they’re looking for more specialist skills. But it’s worth looking at the story told by government statistics too, because they point to a major shift in Wales’ post-Covid workforce.

The shift is striking. Since the Covid-19 outbreak i.e. between February 2020 and September 2022, nearly 30,000 people of working age have dropped out of employment. It’s equivalent to one in fifty workers disappearing over two and a half years.

At the same time, the number of people aged 16-64 who are not working and not looking for a job – so-called economic inactivity – has soared. Some of the reasons for people not working are unchanged in the last two years: around a quarter of people are full-time students, 18 per cent are looking after their family or home and 12.5 per cent are retired early. What has changed is the number of people who are long-term sick.

Since the outbreak of Covid, 17,700 more people in Wales have become economically inactive because of long-term illness. The nature of their ill-health is varied: some people have suggested that people are unable to work while they wait for NHS treatment, others have suggested the numbers are a result of the pandemic, including Long Covid, back and shoulder-pain from working from home and poor mental health. Unusually, the increase in sickness has occurred across all age groups – this is not just an older worker phenomenon.

The economic and social implications of this shift in Wales’ workforce cannot be overstated. That one in thirteen of all people aged 16 – 64 years has a level of illness that is so serious that they are not working is simply extraordinary. It means a loss in economic output because workers are not producing goods or services in the formal economy. It means a brake on businesses which cannot operate at full capacity. It also means a loss of consumer spending power as former employees get by on sick pay, whether occupational or statutory. And that loss of spending power coupled with rising prices could also trigger an increase in debt and arrears of all kinds as people struggle to cope.

High levels of sickness also put pressure on public finances. People who are long term sick are likely to be paying less in tax and National Insurance, while at the same they are probably using more public services, including accessing health services and claiming various welfare benefits to supplement their income.

What should be done? Well, there have already been many calls for government programmes to encourage and support people back to work. People who claim Universal Credit because of ill health will be encouraged to step up their job search, with the threat of losing their benefits if they do not. Others may well return to work through their own initiative when their health improves, although ironically being off sick for an extended period can sometimes worsen people’s health. Employers can also help, by making adjustments to jobs to enable people with health conditions to work, such as offering shorter hours of work or reducing physical demands. The Confederation of British Industry and the Chartered Institute of Personnel Development have both recently launched toolkits to support employers to adopt best practice when employees are sick.

Whether this will be enough to reverse the shrinkage of the workforce remains to be seen. It took the Welsh labour market twenty years to recover from the big increase in long-term sickness in the 1980s. We can only hope that the recovery this time is much, much quicker.

The Bevan Foundation is an independent charity whose insights and ideas are helping to solve poverty and inequality in Wales. This Christmas we’re aiming to raise £3,000 towards our work to ease the cost of living crisis as we forecast that the average Welsh household will need to spend £5,000 a year more by the end of 2023 to afford the same things as in 2021. To help, either as a business or individual, please visit: https://www.bevanfoundation.org/campaign/christmas-callout/