On 8 February 2024, the House of Lords is due to debate the report from the House of Lords Economic Affairs Committee, ‘Where have all the workers gone?’, published in December 2022.

The report was the outcome of the committee’s inquiry into the size of the UK labour force, launched in July 2022.[1] The inquiry set out to examine the “causes of the reduction in the size of the labour force” since the coronavirus pandemic.[2]

1. The committee’s conclusions and recommendations

The report noted that levels of economic inactivity had increased in the UK during the pandemic.[3] It quoted Office for National Statistics (ONS) figures that in August–October 2022 economic inactivity had increased by 565,000 people compared to pre-pandemic levels. The committee used the same definition of ‘economic inactivity’ as the ONS: those who were neither in work nor actively seeking work.[4] Economic inactivity is often due to factors such as retirement, studying, ill health or caring responsibilities. The committee claimed that, unlike in other developed economies, the rate of economic inactivity in the UK had not fallen back to pre-pandemic levels.

The committee stated that a shortage of labour posed several “serious challenges” to the UK economy, as it could:

  • exacerbate the current inflationary challenge
  • damage growth in the near term
  • reduce the revenues available to finance public services[5]

The committee stated that, although the causes of the rise in inactivity were “complex”, its inquiry had identified four main factors:

  • early retirement among 50 to 64-year-olds
  • increasing ill health among the total population
  • post-Brexit changes to the structure of UK immigration
  • an ageing population

The committee argued that, of those factors, the “key driver” of the rise in inactivity had been early retirement among the over 50s. It acknowledged that the reasons for the increase in early retirement were “unclear”, but it proposed that that the coronavirus “furlough scheme and increased redundancies, could have prompted some people to consider earlier retirement”. Other possible explanations included “increased savings during the pandemic and the UK’s pensions flexibilities, which could have enabled earlier retirement”.

The report stated that for many early retirees it was a “lifestyle choice” and that many of them were “reasonably well-off”, although cost of living pressures may impact this group in the future. Nonetheless, the report claimed that it was “unwise” for policymakers to assume that this group “will come back or be persuaded back” to work by changes in “employers’ practices or by policy measures”.

On the impact of ill health on labour supply, the committee said the effects of long Covid and NHS waiting lists on economic inactivity were “unclear”, but it recommended that the government should investigate the impacts more thoroughly.

On immigration, the committee noted that the end of EU free movement and the introduction of the UK’s points-based visa scheme had changed the structure of UK immigration. The committee said that many “lower-paid roles” in the economy (such as in agriculture, hospitality and care) had previously been filled by EU workers, but the new immigration system “prioritises skilled workers”. The report said that this had “contributed to a mismatch” in the labour force, accentuating labour shortages in those sectors.

The committee’s recommendations called for the government to include various issues in the Department for Work and Pensions’ (DWP) review of worker participation, which had been announced in the November 2022 autumn statement.[6] The autumn statement said the review would be “concluded in early 2023”. The committee recommended that the review should consider the following topics:

  • The impact of long Covid and NHS waiting lists on future labour supply.
  • The longer-term impact on the workforce if the trend in early retirement continued.
  • Measures that could be taken to encourage future age cohorts to stay in work.
  • The potential link between pensions policy and economic inactivity.
  • If changes to labour supply persist, some sectors of the economy could be “smaller than they would have been, or some businesses will likely fail”. Given that scenario, the DWP review should consider whether any of those scenarios “would elicit concern and a policy response”.

2. Government response to the committee report

The committee published the government’s response to the report on 2 May 2023.[7] The government said it was “grateful for the committee’s research” into workforce participation issues. The government said that the UK had “close to record unemployment”, but it acknowledged that economic inactivity had increased during the pandemic and had “not returned to pre-pandemic levels as the economy recovered”. However, the government also said it was “too early to determine if changes since 2019 are short-term fluctuations or the beginning of a longer-term trend”.[8] The government said it would “see if this trend has continued at the next [ONS] statistics release, expected in September 2023”.

In terms of overall support, the government said there were a range of measures available to help people to “start, stay and succeed in work”. These included:

[The] jobcentre plus network which provides vital support to individuals, sector-based work academy programmes to help customers compete for local jobs, and Restart which provides up to 12 months of intensive, tailored support to help job-ready universal credit and jobseeker’s allowance claimants who have been unemployed for more than nine months move into sustained employment.[9]

The government stated that the March 2023 spring budget had included a “wide-ranging package” of measures designed to support people to “enter work, increase their working hours and extend their working lives”. These measures were focused on groups who “face additional barriers to work, including disabled people and those with health conditions, the over-50s, parents and carers”.

For the disabled and those with long-term health conditions, the government highlighted the measures in the health and disability white paper, which had also been published in March 2023.[10] The government said the white paper would help disabled people to “move into and remain in work”. The government also highlighted the ‘universal support’ scheme announced in the 2023 spring budget, which would “match people with disabilities and long-term sickness with jobs and provide support and training to help them succeed”.

On early retirement, the government stated that the spring budget had included commitments to expand the ‘mid-life MOT’, a scheme for those in their 40s and 50s to “take stock of their finances and wellbeing to prepare for a more secure retirement”.[11] The government also said that the DWP was working with the Department for Education to “introduce ‘returnerships’ aimed at providing over-50s with the skills and routes to get back to work”.[12]

On pensions, the government said that to incentivise those who can remain in the labour market, it was “removing the pensions lifetime allowance charge and increasing the annual allowance and money purchase annual allowance”.

To reform the broader labour market, the government also said that it was supporting six private member’s bills, which would “increase workforce participation [and] protect vulnerable workers”. The six bills have subsequently received royal assent as the:

  • Neonatal Care (Leave and Pay) Act 2023, which provides entitlements to leave and pay for employees with responsibility for a baby receiving neonatal care.
  • Employment (Allocation of Tips) Act 2023, which ensures all tips and service charges must be distributed to workers without deductions.
  • Protection from Redundancy (Pregnancy and Family Leave) Act 2023, which provides greater redundancy protections for those on maternity, adoption or shared parental leave.
  • Carer’s Leave Act 2023, which provides a new entitlement to carer’s leave.
  • Employment Relations (Flexible Working) Act 2023, which makes it easier for employees to request flexible working.
  • Workers (Predictable Terms and Conditions) Act 2023, which gives employees a right to request a more predictable working pattern.

3. Recent developments

The government’s response to the committee report made no reference to the DWP review of workforce participation. In light of this, Lord Bridges of Headley, chair of the committee, wrote to the secretary of state for work and pensions, Mel Stride, on 15 May 2023 to request an “update on the review’s progress and its expected publication date”.[13]

Mel Stride replied on 26 May 2023.[14] He said that the package of measures announced in the 2023 spring budget “represents the conclusion of my review” into workforce participation. Mr Stride reiterated that the spring budget measures were designed to support people to enter work and to remain in work. These were targeted at “key groups”, which included those with health conditions and the over-50s. A summary of reaction to the spring budget can be found in the House of Commons Library briefing, ‘Spring budget 2023: Reaction’ (16 March 2023).

In September 2023, the ONS published its most recent update of employment and economic inactivity statistics, which provided the figures up to May–July 2023.[15] Figure 1 below shows the ONS data for economic inactivity for people aged 16–64. It shows that, since the committee published its report, the level of economic inactivity has declined, reaching 281,000 above pre-pandemic levels by March–May 2023. Since then, there has been an increase, up to 410,000 above pre-pandemic levels by May­–July 2023.

Figure 1. UK economic inactivity, people aged 16 to 64 years, seasonally adjusted, cumulative change from December 2019–February 2020 to May–July 2023 (thousands)

Graph showing the change in UK economic inactivity between December 2019 to July 2023
Source: Office for National Statistics, ‘Employment in the UK: September 2023’, 12 September 2023

On the reasons for the trend in economic inactivity, the ONS stated:

The increase in economic inactivity since the start of the Covid-19 pandemic had been largely driven by those who were students and the long-term sick. The increase in economic inactivity during the latest quarter (May to July 2023) was driven by those inactive because they were students or inactive for other reasons. Those inactive because they were long-term sick also increased to another record high.[16]

4. Read more

Cover photo by Eric Prouzet on Unsplash


  1. House of Lords Economic Affairs Committee, ‘UK labour supply’, accessed 25 January 2024. Return to text
  2. House of Lords Economic Affairs Committee, ‘Where have all the workers gone? Economic Affairs Committee launches new inquiry’, 28 July 2022. Return to text
  3. House of Lords Economic Affairs Committee, ‘Where have all the workers gone?’, 20 December 2022, HL Paper 115 of session 2022–23. Return to text
  4. As above, p 7. Return to text
  5. As above, p 3. Return to text
  6. HM Treasury, ‘Autumn statement 2022’, November 2022, C) 751, p 32. Return to text
  7. House of Lords Economic Affairs Committee, ‘Government response from the Department of Work and Pensions to the UK labour supply inquiry’, 2 May 2023. Return to text
  8. As above, p 7. Return to text
  9. As above, p 1. Return to text
  10. Department for Work and Pensions, ‘Transforming support: The health and disability white paper’, 15 March 2023, CP 807. Return to text
  11. HM Treasury, ‘Spring budget 2023’, March 2023, HC 1183 of session 2022–23, p 51. Return to text
  12. House of Lords Economic Affairs Committee, ‘Government response from the Department of Work and Pensions to the UK labour supply inquiry’, 2 May 2023, p 2. Return to text
  13. House of Lords Economic Affairs Committee, ‘Letter to the Rt Hon Mel Stride MP, secretary of state for work and pensions’, 15 May 2023. Return to text
  14. Department for Work and Pensions, ‘Letter to Lord Bridges of Headley, chair of the Economic Affairs Committee’, 26 May 2023. Return to text
  15. Office for National Statistics, ‘Employment in the UK: September 2023’, 12 September 2023. Return to text
  16. As above. Return to text