Exodus from workforce costs UK ‘£16bn a year’ in lost tax receipts
Institute for Employment Studies says UK has 800,000 fewer people in work or looking for work since before Covid. The UK has suffered the biggest contraction in its workforce since the 1980s, costing the public finances at least £16bn a year in lost tax receipts, according to a study. Hundreds of thousands of people have quit the labour market since the pandemic and never returned, undermining the strength of the economy and leaving the government out of pocket, according to the Institute for Employment Studies. The UK is one of the only countries in the developed world to have seen employment fall post-pandemic: slipping from having the eighth-highest employment rate in the world to 15th. The reduction can be blamed on fewer people entering work in recent years rather than more people leaving it, with 90% of the growth in “economic inactivity” due to more people off work for at least four years or who have never worked at all. The solution to the crisis could include reforming employment support to guarantee help for those who need it; ending the ‘compliance culture’ in job centres; and creating new Labour Market Partnerships to meet local priorities and join up delivery.
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