Workers with chronic health issues have seen annual earnings fall by up to £1700

Workers who have developed health conditions in recent years have seen their annual earnings drop by up to £1,700 on average, a report has found.

People living in the same household as someone who developed a chronic illness also saw their annual earnings fall by around £1,200 on average, according to the new analysis of data spanning 2020-22.

The IPPR, a think-tank, has published the report today to highlight how the UK’s poor record on health is taking a toll on people’s personal finances and job prospects. 

The report concludes that lost earnings were due to factors such as people leaving jobs, working fewer hours, taking early retirement, or not returning to work when they might have done if they were in better health. People with health conditions, as well as those who care for them, also face higher costs, such as paying for healthcare and travelling to appointments. 

The report found that workers on lower incomes – a category that encompasses many women, people from racial minorities, and people from poorer parts of the country – were particularly affected by these issues.

The UK’s rising rates of long-term sickness have been in the spotlight over the past year, especially in the context of worker shortages. The latest official data show that almost 29% of working-age people who are not in the workforce cite a chronic health condition as the reason, up from almost 23% five years earlier.

The UK has a lower “healthy life expectancy” than other developed countries, referring to the number of years that someone will live in a state of good health, the IPPR report says. Economic inequality is a major driver of this trend – both life expectancy and healthy life expectancy vary greatly between rich and poor households.

“Why shouldn’t Britain be the healthiest country in the world?”  

The IPPR is calling on the government to act on boosting health, which would have widespread economic benefits. The report says that much of the sickness in the UK is preventable, through better housing, better jobs, action on public health challenges like obesity, and access to treatments and social care.

“We now know that the UK does worse on health than most other comparable countries – and that this has a tremendous human and economic cost,” Professor Dame Sally Davies, co-chair of the IPPR Commission on Health and Prosperity, said in a statement.

“We need a radical increase in our national ambition – equivalent to the Victorian efforts to transform sanitation and clear slums. Why shouldn’t Britain be the healthiest country in the world?”  

The IPPR report’s authors analysed household data that covers both the five years before the Covid pandemic, and the first two years since it began in early 2020. They broke down their findings into two sets accordingly, although it is not clear to what extent the pandemic itself affected chronic illness rates.

In the dataset starting in 2020, workers who developed a new chronic physical illness saw their earnings fall by £1,200 on average. This rose to £1,700 for a new mental illness. Earnings losses in the pre-pandemic dataset were higher, at £1,800 and £2,200 respectively, possibly because being able to work from home was far less common at that time.

Unequal impacts

The report also breaks down how people with lower incomes are likely to be worse affected. Following the onset of a chronic illness, around one in six people in the lowest income quartile left employment during the pandemic, compared to around one in 20 of those in the highest quartile. 

High-income workers are more likely to have paid sick leave and the ability to work from home. This unequal impact is compounded by the fact that people on low incomes are more likely to experience sickness, and less likely to get the best possible care.

The report also highlighted that lost income disproportionately impacts people along gender, racial and regional lines. For example, it found that better health would improve the incomes of women as a group at twice the rate of men, and that workers from Bangladeshi or Pakistani backgrounds would benefit financially the most from better health.

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