The UK economy is not the only thing suffering from this disappointing statistic. Unemployment can cause people to slide into poverty, increase social exclusion, aggravate health problems and negatively affect the wider community.
Paid employment has a dramatic impact on human health and offers real financial, psychological and social benefits. The advantages include an income not derived from benefits, a social role other than that of patient, psychological recovery and, in the case of mental health problems, possible symptom reduction.
Huge numbers of severely disadvantaged people are being denied these benefits - to the detriment of their health and well-being.
While efforts to create mainstream employment are rightly applauded, not all disadvantaged people are ready to cope with demanding and stressful workplaces.
Statistics show that people with mental health problems find it most difficult to get work; for example, only 25.7 per cent of people with learning difficulties in the UK are employed. Economic alternatives are needed, especially for people who are furthest away from the criteria most workplaces demand.
Social firms are a new type of business set up to provide real jobs for severely disadvantaged people in a market-led environment. At least one-quarter of the workforce in each social firm is severely disadvantaged in obtaining employment. This includes people with mental health problems or physical disabilities, homeless people and ex-offenders.
In the UK alone, the number of businesses in the social firm sector has increased from just five in 1997 to 151 in 2007. They have created the equivalent of 1,625 full-time jobs.
Today's social firms are run by people and organisations that are no longer prepared to stand by and watch the traditional business world overlooking disadvantaged people. Rather than finding disadvantaged people work for the sake of work (like many of the traditional initiatives), social firms offer real employment opportunities and job satisfaction.
Forth Sector is a charity set up to develop and run a collection of social firms that employ people with mental health problems.
In providing good-quality jobs, the charity not only helps people with mental health problems increase their employability and improve their health and social integration, it also helps the community around each social firm.
In 2007, Forth Sector conducted a social return on investment study on one of its social firms, Six Mary's Place, a small guest house in Edinburgh.
The report showed the firm is making a real difference to the people with mental health problems who work there. For every£1 invested in Six Mary's Place, almost£6 was returned in social added value. It also identified that around£21,000 a year of NHS money is saved for every person with a mental health problem employed in the business.
Last March, Social Firms UK launched the International Social Firms Alliance, an online area where people and organisations can meet to discuss and share common issues and best practice on social firm development around the world.
Social Firms UK is holding a conference in Reading on 23-24 June entitled Employment and Skills for Disadvantaged People, Social Firms: A Solution.Speakers include third sector minister Phil Hope. For more information visit www.socialfirms.co.uk