UK Sleepwalking Into Joblessness Epidemic, Tesco Boss Warns

Why It Matters

The widening gap between the labour force and the inactive population threatens UK productivity and fiscal sustainability, prompting urgent policy and corporate collaboration.

Key Takeaways

• Unemployment hits 5.1%, four-year high.
• 9 million economically inactive, 2.9 million youth.
• Tesco invested £1 bn in wages past five years.
• Govt pledged £820 m to youth employment schemes.
• Benefits spending rising, affecting national income.

Pulse Analysis

The UK labour market is confronting a structural shift, not merely a cyclical dip. While headline unemployment sits at 5.1%, the deeper issue lies in economic inactivity: over 9 million people are neither seeking work nor training, with a striking 26 % rise in young adults aged 16‑24 who are NEET (not in education, employment, or training). This demographic drift erodes the future talent pipeline and inflates welfare outlays, creating a feedback loop that hampers consumer spending and long‑term growth.

Tesco, employing more than 300,000 staff across the UK and Ireland, illustrates how large private‑sector players can influence employment dynamics. The retailer has injected an additional £1 billion into wages over the past five years, positioning retail as a flexible entry point for first‑time workers and those re‑entering after caregiving breaks. However, Prasad warns that rising regulatory burdens and employer taxes may constrain hiring capacity, underscoring the delicate balance between profit margins and labour expansion in a cost‑of‑living environment.

Policy makers have pledged £820 million to accelerate youth employment and training, yet experts argue that piecemeal measures will fall short without coordinated action. A comprehensive strategy should combine targeted incentives for businesses, reforms to benefit structures, and investment in skills development to convert inactivity into productive employment. Aligning corporate wage commitments with government programmes could mitigate the "quiet epidemic" and restore the UK’s competitive standing on the global stage.

UK sleepwalking into joblessness epidemic, Tesco boss warns

By Tom Knowles · Tue 10 Feb 2026 11:21 EST (last modified Tue 10 Feb 2026 18:41 EST)

Image: A Tesco staff member walks past a display of fresh vegetables. Tesco has more than 300,000 employees across the UK and Republic of Ireland. Photograph: Tolga Akmen/AFP/Getty Images

The UK is “sleepwalking into a quiet epidemic” of joblessness with millions of people out of work and on benefits, the boss of the nation’s biggest supermarket chain has warned.

Ashwin Prasad, who runs the UK arm of Tesco, said he believed far fewer people were in work than should be and that taxpayers were spending “an ever increasing proportion of our national income on out‑of‑work benefits”.

The rate of unemployment sat at a four‑year high of 5.1 %, according to official data released last month.

Prasad, who took the role of UK chief executive last year, said there had been a “clear, gradual change” over the last decade of people falling out of work. He called on the government and businesses to work together to tackle the issue, arguing that it was damaging the UK’s standing on the world stage.

“We cannot afford to be a country that lets the next generation languish on the sideline,” Prasad said at an event in London hosted by the Resolution Foundation, a think‑tank, adding that the government must stop “tinkering at the edges” of the problem and make bold changes to get more people into work.

More than 9 million people aged 16 to 64 in the UK are classed as economically inactive, meaning they are not actively looking for work or available to start a job. This includes 2.9 million people aged 16 to 24, with almost a million young people not in education, employment or training – a 26 % increase from pre‑pandemic levels.

Analysis by the think‑tank the Centre for Social Justice (CSJ) suggests more than 700,000 university graduates are out of work and claiming welfare benefits. In December, the government announced an £820 million funding package to help more young people into work or onto learning schemes.

Prasad said there were “myriad reasons” for many people being economically inactive and that life had been “incredibly challenging” for lower‑income households for a sustained period of time, saying they had been at the “sharp end of a prolonged era of political instability and economic uncertainty”.

“My perspective from being a major employer in this country is that far fewer people are at work than they could be. This means instead of investing in parts of national life that might stimulate investment and growth into the wider economy, we are spending an ever increasing proportion of our national income on our out‑of‑work benefits.

We have been sleepwalking into a quiet epidemic that is keeping millions of people out of work,” Prasad said.

Prasad did not specify which out‑of‑work benefits he was referring to. The government has said the number of people claiming health‑related benefits that enable them not to work has increased by 800,000 since 2019‑20, while the number claiming a Personal Independence Payment (PIP) to help cover the additional living costs of disability is forecast to double this decade from 2 million to 4.3 million.

However, PIP is not an out‑of‑work benefit, and economists have pointed out that overall out‑of‑work benefits have not risen. Some of the increases have been due to a higher state‑pension age, which has increased the number of “non‑pensioners” claiming sickness benefits who would otherwise be on the state pension.

The UK’s Tesco boss also implied that the government’s increases in regulation and employer taxes were harming businesses’ ability to hire more people.

“Our biggest expenditure is the salaries and the wages of our employees,” Prasad said, adding that any change to this cost had a large effect on Tesco as it was such a big employer.

Tesco, the UK’s dominant grocer, is the largest private‑sector employer in the country. It has more than 300,000 employees across the UK and Republic of Ireland and more than 5,000 stores.

It was accused of giving struggling workers a “slap in the face” when its group chief executive, Ken Murphy, received £9.9 million in pay and perks as profits surged during the cost‑of‑living crisis in 2024. The payout meant Murphy earned more than 430 times the average pay at Tesco that year.

Prasad acknowledged Tesco was in “good financial health” but said the highly profitable retailer had invested an extra £1 billion in wages over the past five years.

He said retail was one of the best sectors in helping people into work. “We provide some of the most flexible work opportunities in the labour market, supporting people to enter the workforce for the first time or re‑enter after they’ve taken time out for either childcare or caring.”