- Unemployment stands at 5.1 per cent, a four-year high.
- More than 9 million working-age people are economically inactive.
- Government points to £1.5bn push to boost jobs and training.
The head of Tesco’s UK business has warned that Britain may be drifting into what he described as a “quiet epidemic” of joblessness, with millions out of work and rising pressure on public finances.
Ashwin Prasad, who became UK chief executive last year, said the country was “sleepwalking” into a situation where too many people were not working and too much national income was being spent on benefits. Speaking at an event in London hosted by the Resolution Foundation, he reportedly said taxpayers were funding “an ever increasing proportion of our national income on out-of-work benefits”.
Official figures released last month show unemployment at 5.1 per cent, the highest level in four years. More than 9 million people aged 16 to 64 are classed as economically inactive, meaning they are not in work and not actively seeking it. That figure includes 2.9 million young people aged 16 to 24. Nearly 1 million of them are not in education, employment or training, a 26 per cent rise compared with pre-pandemic levels.
A slow shift over a decade
Prasad reportedly said there had been a “clear, gradual change” over the past decade, with more people falling out of the labour market. He urged government and businesses to work together, arguing that Britain’s economic standing was at risk if the trend continued.
“We cannot afford to be a country that lets the next generation languish on the sideline,” he reportedly said, adding that ministers should stop “tinkering at the edges” and take bolder steps to get people back into jobs.
Analysis from the Centre for Social Justice suggests more than 700,000 university graduates are currently out of work and claiming welfare. In December, the government announced an £820m package aimed at helping more young people into employment or further learning.
Prasad acknowledged there were “myriad reasons” behind economic inactivity and said lower-income households had faced prolonged instability and uncertainty. However, he added that from the perspective of a large employer, “far fewer people are at work than they could be”, as quoted in a news report.
He did not specify which benefits he was referring to. The government has said the number of people claiming health-related benefits that allow them not to work has risen by 800,000 since 2019-20. Claims for personal independence payment, which helps with disability-related living costs, are forecast to rise from 2 million to 4.3 million this decade. Economists have noted that Pip is not an out-of-work benefit and have argued that overall spending on such benefits has not sharply increased. Some changes are linked to the higher state pension age, which has shifted some claimants into different categories.
Costs, hiring and corporate scrutiny
Prasad also suggested that rising regulation and employer taxes could be affecting businesses’ ability to recruit. “Our biggest expenditure is the salaries and the wages of our employees,” he reportedly said, adding that any increase in those costs has a significant impact on Tesco.
Tesco employs more than 300,000 people across the UK and Republic of Ireland and operates over 5,000 stores. It is widely regarded as the country’s largest private-sector employer.
The company has faced criticism in the past over executive pay. Group chief executive Ken Murphy received £9.9m in pay and benefits in 2024, more than 430 times the average Tesco employee salary that year, prompting accusations that struggling workers had been given a “slap in the face” during the cost of living crisis.
Prasad said Tesco was in “good financial health” and had invested an additional £1bn in wages over the past five years. He added that retail offered flexible roles that could help people enter or re-enter the workforce, including those returning after childcare or caring responsibilities.
A government spokesperson said ministers shared the ambition of boosting employment. The spokesperson pointed to £1.5bn being invested in work, training and apprenticeships, along with a scheme aimed at supporting 300,000 disabled people into jobs. The government is also working with employers through the Keep Britain Working Review and a youth employment inquiry led by Alan Milburn. Under its Jobs Guarantee, young people are being offered paid placements, with Tesco among employers expressing interest.
Whether that will be enough to reverse what some describe as a worrying trend remains to be seen.
