Yesterday Prime Minister Rishi Sunak fired the starting gun on the next General Election. Parliament will be dissolved on 30 May, and a month of campaigning will begin across the country to determine which party will form the next Government after polling day on 4 July.

The labour market challenges facing the next Government

A central part of the Prime Minister’s pitch to voters on Wednesday evening was that his Government has successfully navigated a period of global economic turbulence following the pandemic, and that to change course now risks squandering this progress. In particular, he pointed to an economy emerging from recession and inflation falling back towards the Bank of England’s target of 2%.

Yet while inflation has fallen significantly from its peak in October 2022 and growth forecasts for the UK economy have recently been revised upwards , the reality is most workers continue to face energy, food and housing costs that are much higher than three years ago.

In addition, the most recent labour market data from ONS points to a weakening jobs market in the UK. Pay growth may have remained relatively strong in the second quarter of 2024, but employment levels are falling, unemployment and economic inactivity are rising, and the number of job vacancies is declining.

Rising levels of economic inactivity due to long-term sickness are particularly alarming, with a near record 2.82 million people now opting out of the labour market due to ill health – a staggering increase of over 700,000 people compared to the pre-pandemic period. All while pressure on NHS services remains acute and the state of the public finances more broadly remains extremely challenging.

An urgent need to improve access to secure work in the next Parliament

This backdrop will play a key role in the election debates to follow, with a premium placed on policies that promise to spur economic growth, reduce economic inactivity due to ill-health and improve living standards during the next Parliament.

Work Foundation analysis makes clear that a key component of this drive must be to increase access to secure and well-paid work. The latest figures from the UK Insecure Work Index 2024 estimate that 6.8 million people are stuck in severely insecure work – up 600,000 since 2022 alone.

This matters as these kinds of jobs often bring with them significant precarity to individuals. Those in severely insecure work are, on average, over £3k per year worse off than those in secure work, and often lack access to core employment rights and protections. Over time, they can negatively impact people’s health and well-being, cause financial stress and anxiety and potentially increase the chances of individuals leaving the labour market altogether.

And it also matters because the prevalence of poor quality, insecure work is intertwined with a host of wider economic and societal challenges too.

For example, too often people end up absorbing the risk of severely insecure work because they’re forced to trade job security for the flexibility they need to manage caring responsibilities – filling the gap left by inadequate public provision of child and adult social care. This fact helps to explain why women are 2.3 times more likely than men to face severe insecurity at work.

Meanwhile, 1.4 million people in severely insecure work face the ‘double jeopardy’ of unpredictable shifts and pay, whilst living in the private rented sector – where rents have soared by 15% since January 2022.

Severely insecure work is also risking the future of young people in the labour market, who are at the forefront of a rise in the use of zero-hour contracts in recent years. Evidence suggests that if they remain stuck in this kind of insecure work for long it can limit their chances to get better jobs in the future.

And critically, the prospect of being pushed into severely insecure work also represents a significant barrier to persuading those with long term health conditions to return to the labour market. Those with disabilities are already 1.5 times more likely to be in severely insecure work, and many fear that conditionality in Universal Credit will mean a choice between accepting an insecure job or losing access to their benefits.

Time to modernise worker rights in the UK

This evidence and analysis underlines the urgent need for whichever party forms the next UK Government to strengthen worker rights and protections over the next five years via a new Employment Bill.

Most importantly this Bill should:

• Standardise employment status in order to ensure all workers have access to key rights and protections;
• Make guaranteed minimum working hours the default of all employment contracts, regulating out exploitative zero-hour contracts unless employees request one via a flexible working request;
• Create a properly resourced Single Enforcement Body to oversee compliance with employment regulations;
• Reform Statutory Sick Pay by removing the earnings threshold, uprating the statutory amount and removing waiting days; and,
• Make flexible working a day one right, rather than a right to request.

In recent years, a potential political consensus has emerged in the UK to address many of these issues, with the Conservatives having recently led a ‘Good Work’ agenda based on recommendations of Matthew Taylor’s 2017 Review of Modern Working Practices, and the Labour Party having committed to its New Deal for Working People in 2021.

As we head into a six-week campaign that will define the next five years of UK policy making, it’s critical that all political parties prioritise this agenda. After all, the only route to sustained economic growth, reduced economic inactivity and increased living standards involves driving up access to secure and well-paid work.

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