We need long-term plans, not populist policies, to improve participation in the labour market

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Vacancies have hit 1.3 million. We’re getting used to queues in shops and airports, as employers experience staff shortages. But unemployment is at an historic low of 3.7%. In May, for the first time on record, there were more jobs advertised than there were people looking for work.

But since the onset of the pandemic, we have seen the number of people who are out of work and not looking for work rise steadily to 21.4% in May 2022, and people in these circumstances are classed as economically inactive rather than unemployed in jobs data. Economic inactivity is an umbrella category which includes people who aren’t well enough to work, full-time students, carers, parents and those who are retired.

This suggests that alongside a success story of high employment following the end of the furlough scheme, there is also a challenge: the UK’s participation problem.

To some extent, this might have been expected. With growing uncertainty in the economy, we saw a higher number of young people moving in to full time study at the onset of the pandemic than in previous years, for example.

But there has also been growth in inactivity among older people, and that has continued to rise this year. 77% of people aged 50-59 who stopped work during the pandemic had left work sooner than expected, and 19% reported stress or mental health as being their main reason for leaving work, according to analysis from the ONS. This suggests that in some cases, the decision to leave work was not a positive choice to retire, but rather a protective measure.

More than a quarter (26.1%) of people who have stopped working said the main reason was sickness. The difference between the employment rates of disabled and non-disabled people, termed the disability employment gap, is partly driven by barriers to retention, with people who acquire an impairment or condition while working more likely to leave the labour market.

A fifth (19.6%) of people who are inactive report they have stopped working to care for family and home. For some, this will be a positive choice to take. But with inflation putting pressure on already high childcare and social care costs, we’re at risk of rowing back decades of progress of women in employment through gaps in our social infrastructure.

Some commentators are suggesting the answers to our skills shortages and participation problem are straightforward. Just this weekend, articles in both The Times and The Spectator called for a shift in our approach to social security, making a much wider group of people getting benefits subject to requirements to meet with work coaches and apply for jobs.

But this approach has already proven unsuccessful among people facing barriers to work, including disabled people and those with a long term health condition. Generalist support like the Government’s Work Programme has been effective in broad terms, but it was much less effective at supporting individuals with multiple and complex needs to enter and stay in employment.

Requiring disabled people, parents and carers to contact a work coach or apply for jobs won’t support people to enter and stay in work, but the threat of a sanction could cause real harm to households already struggling through the cost of living crisis.

Instead, more specialist and tailored support should be made available on an optional basis for those who want to access it. We have been among organisations calling for a Plan for Participation, facilitating retention with a focus on flexible work across all sectors of the economy, and commissioning specialist employment support services for individuals facing multiple barriers to work.

At the same time, we have a major challenge in terms of the quality of jobs on offer. Over 6 million UK workers are in severely insecure work. The Queen’s speech was a missed opportunity to launch an Employment Bill, long-planned legislation to properly address these issues through clarifying employment status and widening access to flexible work. Without it, and with employers facing ongoing economic uncertainty, there’s a risk that we will see a further growth in insecure, poor quality work, leaving those with health conditions or managing caring and parental responsibilities more likely to be unable to find viable work options where they live.

Ambitions to boost pay, employment and productivity in every area of the UK by 2030 are at the core of the Government’s flagship Levelling Up agenda. It should be these objectives, and not a shift to outdated and ineffective policies, that shape employment support and a drive to improve job quality in the UK.


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