As we start 2026, we asked our team to choose key policy areas to look out for in the world of work and the labour market this year.

A new agency on the side of workers

Alice Martin, Head of Research

In April, the new Fair Work Agency will bring fragmented regulators together to enforce minimum wage, holiday and sick pay, and basic employment rights. If effective, it could rebuild workers’ confidence, reduce pressure on tribunals, and raise standards in sectors like hospitality, retail, construction and care. With limited resources, success will depend on working closely with trade unions, community groups, investors and local government to find and tackle bad practice early.

Will the Government change tack on Europe?

Aman Navani, Research and Policy Analyst

The Government has struggled to make meaningful progress on its primary mission of boosting economic growth. Some of its policies on planning and pensions reform do have the potential to boost long-run growth. However, the public is losing patience and seems increasingly disillusioned. The labour market is cooling and unemployment is on the rise, especially for young people. With the Government running out of time to turn things around, will it be bolder in pursuing a closer economic relationship with the EU? Some Cabinet members have suggested joining the customs union while the PM has floated closer alignment with the single market as a path forward. A new economic settlement with Europe may be the Government’s best bet in a dash for growth.

A focus on tackling unemployment

Ben Harrison, Director

We ended 2025 with unemployment on the rise, vacancies falling and those out of work finding it more challenging to get a job. I expect the argument surrounding why more firms appear reluctant to hire will escalate further in 2026. Some will argue Government interventions on employer NICs, rises in the minimum wage and the Employment Rights Act are to blame, while others will focus on wider structural issues with the UK economy and labour market.

This will put pressure on Government to intervene further, especially to reverse the rising tide of youth unemployment. All eyes are likely to be on Rt Hon Alan Milburn’s Review into the issue when it publishes next Summer, with the former Health Secretary promising radical action to avoid a lost generation of young people.

Unlocking a generation: The national wake-up call on youth inactivity

Emelia Williams, Research and Policy Analyst

As nearly one million young people aged 16 to 24 are currently not in education, employment, or training (NEET), tackling youth inactivity will be a key focus in 2026. In particular, last month former Health Secretary Alan Milburn announced an independent investigation into what’s leading the rise in youth inactivity, with a particular focus on the impact of mental health conditions and disability. In the new year, the Work Foundation, in partnership with the Runnymede Trust and the Youth Futures Foundation, will also be publishing new place-based research exploring the depth of experiences of young people of colour and the employment landscape in four case study areas across the UK.

Spring local elections, a crunch point for the Government

George Williams, Research and Policy Analyst

On 7 May large parts of the UK will head to the polls to vote in English local elections, the Scottish Parliament election or the Senedd election in Wales. This will be first major set of elections since the 2024 and the stakes could not be higher for the Government.

Whatever the outcome, the results and ensuing debates on where the Government has gone wrong (or right), will likely shape the political narrative for the coming year. Which could have major repercussions on the Government’s policy agenda on employment, health and welfare. Will the results see the Government commit further to its current direction of travel, or will ministers be forces to reconsider key policies? We will find out in the Spring.

Left in the lurch – platform workers and limb (b) status

Jess Redmond, Policy Advisor

The Government’s decision to not address the legal question of worker status for platform or ‘gig’ economy workers may come to bite them once the Employment Rights Act comes into effect. There has been ambiguity around whether platform workers should be considered “limb (b) workers” – a kind of ‘middle ground’ status between employee and self-employed – under employment law, or whether the provisions in the Act should apply to them. With Labour proposals to introduce clarity on status shelved for future consultation, employers may move towards utilising platform models to avoid implementing new rights in the Act. As our recent research shows, this may already be happening in the retail industry.

Will Government action on cost of living put more money in your pocket?

Jon Fitzmaurice, Head of External Engagement

2026 could be a pivotal year for workers’ rights, but will real pay rise? The Government has pledged to raise living standards, yet despite historically strong regular pay growth, real wages have risen by just £2.73 a week on average.

Unsurprisingly, many workers do not feel better off. Our survey analysis shows only half of workers believe pay is keeping pace with the cost of living, as inflation continues to erode real earnings. And the squeeze is felt most sharply by those on the lowest incomes.

In response, the Government has promised to cut family energy bills and freeze rail fares to ease inflationary pressures. But with wage growth stalling, will these measures be enough to make a tangible difference for workers struggling to make ends meet?

Guaranteed hours for zero-hour workers – depending on the fine print

Rebecca Florisson, Principal Analyst

The Employment Rights Act introduces the right for workers on low hours or zero-hour contracts to be offered guaranteed hours based on hours worked during a reference period. Following Royal Assent, Government will launch a public consultation which will inform the secondary legislation that will fill out much of the important details of how, when and to whom the rules apply. For example, what constitutes a reference period (likely 12 weeks). This measure has the potential to provide more security for over one million workers on zero-hour contracts, but its real impact will be down to the policy detail.

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