The UK is facing a looming crisis that could result in widespread joblessness, warns the chief executive of Tesco, the largest supermarket chain in the country. Ashwin Prasad has expressed concern that the nation is 'sleepwalking into a quiet epidemic' as millions find themselves unemployed and reliant on government assistance.
Prasad, who took the helm of Tesco’s UK operations last year, believes that the actual number of people employed is significantly lower than it should be, which raises serious questions about economic productivity and efficiency. He pointed out that taxpayers are increasingly financing a larger share of national income to support out-of-work benefits.
Recent official statistics reveal an unemployment rate of 5.1%, the highest it’s been in four years.
During a discussion in London organized by the Resolution Foundation, a think tank focused on social issues, Prasad noted that there has been a 'clear, gradual change' over the last decade that sees many individuals falling out of the workforce. He emphasized that both government and businesses need to collaborate more effectively to address this issue, highlighting that the current situation is detrimental to the UK's reputation globally.
Prasad stated, 'We cannot afford to be a country that allows the next generation to linger on the sidelines.' He urged the government to move beyond merely making small adjustments to policies and instead implement substantial reforms aimed at reintegrating more individuals into the workforce.
Currently, over 9 million individuals aged between 16 and 64 in the UK are categorized as economically inactive, meaning they are neither seeking employment nor available for work. This includes approximately 2.9 million young adults aged 16 to 24, of whom nearly one million are not engaged in education, training, or employment—a staggering increase of 26% compared to levels before the pandemic.
Further analysis from the Centre for Social Justice (CSJ) indicates that more than 700,000 university graduates are currently unemployed and relying on welfare benefits. In response to these challenges, the government announced a funding package worth £820 million in December, aimed at supporting more young individuals in finding jobs or engaging in learning programs.
Prasad acknowledged that there are numerous factors contributing to the high rate of economic inactivity, particularly noting the significant struggles faced by low-income households. He referred to their experiences as being at the 'sharp end' of a prolonged period marked by political turmoil and economic uncertainty.
Despite this, Prasad asserted, 'From my perspective as a major employer in this country, there are far fewer people working than could be.' He explained that instead of channeling funds into areas that could foster investment and stimulate growth within the broader economy, an increasing portion of national income is being allocated to fund benefits for those who are unemployed.
'We have been sleepwalking into a quiet epidemic that is keeping millions of people out of work,' he added.
However, Prasad did not specify which out-of-work benefits he was referencing in his comments. Government data shows that the number of individuals claiming health-related benefits—allowing them to remain out of work—has surged by 800,000 since 2019-20. Additionally, the number of people receiving personal independence payments (PIP), which assist with extra living costs due to disabilities, is projected to double in this decade, moving from 2 million to 4.3 million.
It’s important to note that PIP is not classified as an out-of-work benefit, and some economists have highlighted that the overall amount spent on out-of-work benefits has not significantly increased. Some of the rise in claims can be attributed to a higher state pension age, leading to a greater number of non-pensioners receiving sickness benefits who would otherwise qualify for pensions.
Moreover, Prasad hinted that rising regulations and employer taxes imposed by the government are negatively impacting businesses' capacity to recruit additional staff. 'Our largest expense is the salaries and wages of our employees,' he explained, emphasizing that any alterations to this cost structure profoundly affect Tesco as a major employer.
With more than 300,000 employees across the UK and Ireland, Tesco stands as the largest private sector employer in the nation. Recently, the company faced criticism for allegedly giving its struggling workforce a 'slap in the face' when its group CEO, Ken Murphy, received £9.9 million in compensation during a time when profits soared amidst a cost-of-living crisis in 2024. This payout represented over 430 times the average salary of Tesco employees that year.
Prasad acknowledged that while Tesco is currently in a 'good financial position', the retailer has nonetheless invested an additional £1 billion in employee wages over the past five years. He further remarked that retail remains one of the strongest sectors for facilitating job opportunities, stating, 'We provide some of the most flexible work options in the labor market, enabling individuals to enter the workforce for the first time or return after taking time off for childcare or caregiving responsibilities.'
