The UK has seen the biggest rise in people leaving the labour force of G7 countries through the pandemic, leaving employers short of workers. New research by Learning and Work Institute (L&W) shows that this is part of a long-term demographic crunch as the baby boomer generation retire, and that there is a class and gender divide between those who can afford not to work and those who are unable to without much more support.

The numbers of people not working and not looking for a job have increased by around 600,000 during the pandemic, growing Britain’s so-called economically inactive group to nine million working-age people. A new report by L&W sheds light on this rise in economic inactivity showing that, while it was initially driven by a rise in people taking early retirement, people have a diverse range of reasons for not working.

The analysis highlights stark class and gender divides. Better paid and male dominated roles like managers and directors, IT professionals and other professional roles account for around one in three people who took early retirement. By contrast, people from lower paid, traditionally female dominated roles, were more likely to give up work for health reasons: housekeeping; caring personal services; cleaning; and other elementary services occupations account for over one quarter of such moves.

There has also been a sharp rise in the number of people with long-term sickness, reflecting a rise in ill health in the population, the impacts of the pandemic, plus lengthy NHS waiting lists. In addition, there are huge geographic variations: the proportion of working-age people economically inactive due to long-term sickness varies from 1 in 100 in parts of Surrey to 1 in 7 in parts of Merseyside.

The research finds that the growth in people leaving the workforce is part of a longer-term demographic crunch, with 1.4 million more people projected to retire over the next 13 years than young people will enter the workforce. By the 2040s, there will only be 2.3 people of working age for every person above state pension age, down from 3.5 in the 2010s. Expanding our workforce by helping more people with health conditions and caring responsibilities to work will be key to avoiding labour shortages over the coming decades. And employers will have to overcome any ageism to make sure they can employ the best people for their roles.

L&W’s report ‘Missing Workers’ argues that there is now an imperative that we help more people, particularly those with caring responsibilities and disabled people who make up the bulk of Britain’s nine million economically inactive people, to find work. Many in this group are unable to work, but 1.7 million say they would like to work. Yet the report finds that only one in ten out-of-work older people and disabled people get help to find work each year – this is a forgotten group of potential workers.

In response and in its forthcoming review of economic inactivity, expected to report in the next month, the Government should set out a long-term plan to increase the UK’s employment rate to the highest in the G7, boosting our economy by £23 billion. It can take immediate steps to this goal by opening up access to back-to-work programmes to those outside the workforce, rolling out Career MOTs to give people more information on their options, and investing in social infrastructure like childcare, health and social care, and skills that help people work. Employers also need to think about how they design jobs and tackle ageism.