The government has set an ambition get 80% of 16-64-year-olds
into work. Currently, 75% of 16-64-year-olds are in work in the
UK, according to official statistics. This is above the
international average – among the OECD (a club of rich
countries), 70% of 16-64-year-olds are in work on average.
Achieving an employment rate of 80% would mean moving around 2.2
million people into work. It would take the UK to the
international frontier: only four OECD countries have employment
rates of over 80% already (Netherlands, Switzerland, Iceland, New
Zealand).
The countries who have already hit 80% employment rates tend to
have much higher employment rates amongst people in their first
and last part of working age (under-25s and 55–64-year-olds.)
This explains three quarters of the difference between the UK
employment rates and the employment rate in these countries.
While there are many ways the UK could move towards an 80%
employment rate, international examples suggest the most
plausible route involves increasing employment rates for both
15-24-year-olds and 55-64-year-olds.
It is going to be difficult to reach the 80% employment target
without first halting the trend towards more people being out of
work due to ill health. 6.6% of the UK's working age population
are inactive due to ill health – up from 5% in 2019. There has
also been a related rise in claims to health-related benefits up
from 7.5% of the working age population in 2019 to 10% in 2023.
Inactivity due to ill health is a particular problem
amongst people towards the end of their working careers. 11.3% of
55–64-year-olds were inactive due to ill health in 2023, up from
8.9% in 2019.
Eduin Latimer, Research Economist at the Institute for
Fiscal Studies said:
“The government has set an ambitious target of achieving an 80%
employment rate, which would give the UK one of the highest rates
in the developed world. Compared to countries that already have
80% of 16–64-year-olds in work the UK has much lower employment
rates among older and younger individuals. Increasing employment
amongst these groups is likely to be crucial if the government
wants to hit its target. But this goal is made much harder by the
rising share of the population with health-related
inactivity.”
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