Government will fail to meet its employment target unless firms recruit and retain more disabled workers

The UK Government will struggle to achieve an 80 per cent employment rate unless it further incentivises firms to employ disabled workers – via return-to-work recruitment incentives and a new Right to Reintegration – according to new research published today (Thursday) by the Resolution Foundation.

The report Opening Doors notes that while the headline employment rate for disabled people has risen from 44 to 54 per cent between 2014 and 2025, new analysis reveals that when accounting for the rising prevalence of disability among the working-age population, disability-related labour market exclusion has actually deteriorated. A prevalence-adjusted measure of the disability employment gap sees it rising from 5.4 per cent in 2013 to 6.8 per cent in 2023.

With the incidence of disability likely to continue increasing as the country ages and ails, growing employment among disabled people will be vital to meeting any employment targets. Halving the disability employment gap would take the Government more than halfway towards meeting its 80 per cent employment rate target.

To date, policy debates have centred on how the welfare system can encourage disabled people into work. But this narrow focus neglects the crucial role employer practices can play in reducing the systemic barriers that disabled people face to finding work. The authors propose practical improvements to recruitment, reimbursement, and reintegration to address these barriers.

The Foundation recommends that return-to-work recruitment incentives should be introduced to encourage employers to hire new staff with disabilities, especially those who have been out of work for six months or more. These incentives could be delivered either by subsidising employers who take on a new employee previously in receipt of welfare, or by creating a disability employment levy based on the design of the apprenticeship levy.

Although the cost of Access to Work – which supports disabled people into work by reimbursing employers for the cost of reasonable adjustments – has increased by four-fifths over the past decade, the report notes that cutting spending for the impactful scheme would be an own goal. It should instead be strengthened by increasing clarity for employers and improving the user experience for workers.

Reintegration has the greatest potential to transform disabled employment in the UK. Just as recent decades have seen a transformation in the way mothers are treated in the labour market – with a statutory right to return to their jobs after a period of leave – it’s time to rethink how we support people who temporarily stop working due to sickness, say the authors.

The Foundation notes that it is still too easy for employers to let disabled people go after periods of incapacity. Once that link is broken, it is far harder for individuals to find employment.

To address this, the report calls for a new Right to Reintegration for workers on sick leave. This would oblige employers to demonstrate that they have made sufficient reintegration efforts to bring the worker back into their role before they have the option of dismissing them. If the UK were to achieve comparable success with similar measures in the Netherlands, this could lead to incapacity benefit on-flows falling by two-thirds.

Professor Ben Baumberg Geiger, a Research Associate at the Resolution Foundation, said:

“The Government has, rightly, set an ambitious target of 80 per cent employment. But it will fail to get anywhere close to this unless it tackles the huge employment gap faced by disabled people.

“While some metrics – that don’t account for the increased incidence of disability – seem to show a decreased employment gap for disabled people, prevalence-adjusted measures show that disabled people’s labour market inclusion has in fact been getting worse in recent years.

“Supporting this group into work will be a vital part of getting Britain working. Halving the disability employment gap would take the Government more than halfway towards meeting its 80 per cent employment rate target.

Louise Murphy, Senior Economist at the Resolution Foundation, said:

“Much of the debate around supporting disabled people into work has centred on reforming benefits to incentivise employment. But while important, this has neglected an even more central issue – the role of employers in helping more disabled workers to join, remain and thrive in the workplace.

“The Government should do more to incentivise firms to employ disabled people, especially those who have been out of work for long periods. But employers need to do more in return. A new Right to Reintegration could help disabled workers back into work in the same way that maternity rights transformed women’s employment prospects a generation ago.”