The UK is “sleepwalking into a quiet epidemic” of joblessness, with millions of people out of work and reliant on benefits, according to the chief executive of Britain’s largest supermarket chain. The warning comes amid rising concern over economic inactivity, youth unemployment and the long-term impact on public finances and growth.
Ashwin Prasad, who runs the UK arm of Tesco, said too many people were falling out of work and that taxpayers were spending an ever-growing share of national income on out-of-work benefits. Speaking at an event in London hosted by the Resolution Foundation, he urged government and business leaders to act decisively to reverse the trend.
Unemployment and economic inactivity at worrying levels
Official data published last month showed the UK unemployment rate at a four-year high of 5.1%, underlining growing fragility in the labour market. Alongside this, more than 9 million people aged 16 to 64 are now classed as economically inactive, meaning they are not in work and not actively seeking employment.
This group includes 2.9 million people aged 16 to 24, with close to one million young people not in education, employment or training (Neet). That figure represents a 26% increase compared with pre-pandemic levels, raising concerns about long-term scarring effects on a generation of workers.
Analysis by the Centre for Social Justice suggests that more than 700,000 university graduates are currently out of work and claiming welfare benefits. In response to these trends, the government announced an £820m funding package in December aimed at helping young people into jobs, apprenticeships or further learning.
‘Quiet epidemic’ putting pressure on public finances
Prasad said there had been a “clear, gradual change” over the past decade, with more people leaving the workforce and failing to re-enter. He warned that this shift was damaging the UK’s international competitiveness and diverting public money away from investment and growth.
“We cannot afford to be a country that lets the next generation languish on the sidelines,” he said, calling on ministers to stop “tinkering at the edges” and instead pursue bold reforms to increase participation in the labour market.
He acknowledged that economic inactivity has complex causes, including long-term illness, caring responsibilities and the impact of years of political instability and economic uncertainty on lower-income households. However, he argued that from the perspective of a major employer, far fewer people were working than could or should be.
Instead of investing in infrastructure, skills and productivity, Prasad said the UK was spending an increasing share of its resources on benefits, warning that this approach was unsustainable over the long term.
Benefits debate and health-related claims
Prasad did not specify which benefits he was referring to, but government data shows a sharp rise in health-related claims. The number of people claiming sickness benefits that limit their ability to work has increased by around 800,000 since 2019-20.
At the same time, the number of people receiving personal independence payment (PIP), which helps cover the extra costs of disability, is forecast to rise from 2 million to 4.3 million this decade. Economists note, however, that PIP is not an out-of-work benefit, and overall spending on traditional unemployment benefits has not risen significantly.
Some of the increase in sickness-related claims reflects demographic change, including the rise in the state pension age, which has left more people of working age claiming health-related support rather than receiving a pension.
Employer costs and regulation under scrutiny
The Tesco UK boss also suggested that higher regulation and rising employer taxes were making it harder for businesses to hire more staff. Wages are by far the biggest cost for large employers, he said, and even small increases in payroll expenses can have a significant impact on hiring decisions.
Tesco is the UK’s largest private-sector employer, with more than 300,000 staff across the UK and Republic of Ireland and over 5,000 stores. While the company has been criticised for executive pay — including a £9.9m package awarded to group chief executive Ken Murphy during the cost-of-living crisis — Prasad said the retailer had invested an additional £1bn in wages over the past five years.
He argued that retail plays a crucial role in helping people enter or re-enter the workforce, offering flexible roles suited to students, parents and carers. “We provide some of the most flexible work opportunities in the labour market,” he said, adding that retail often serves as a gateway to long-term employment and skills development.
Wider concerns about growth and workforce participation
Economists and policymakers have increasingly warned that high economic inactivity poses a serious risk to UK growth. With an ageing population and rising rates of long-term ill health, boosting workforce participation has become a central challenge for successive governments.
Thinktanks including the Resolution Foundation have called for coordinated action across health, welfare, skills and employment policy to prevent millions of people from becoming permanently detached from the labour market. Without such reforms, analysts warn that the UK could face weaker growth, higher taxes and rising inequality for years to come.