A new Labour Market Advisory Board, established to combat rising economic inactivity, held its first meeting on Monday [9 September], marking the beginning of a renewed government push to get more people back into work. The board, appointed by Work and Pensions Secretary Liz Kendall MP, includes labour market experts from business, academia, and industrial relations and is tasked with addressing what Kendall calls “the greatest employment challenge for a generation.”
The initiative comes as the UK grapples with a significant rise in long-term sickness, which has kept hundreds of thousands of people out of work since the pandemic. Economic inactivity in the UK is now at near-record levels, with around 2.8 million people out of employment due to long-term illness. This trend has resulted in the UK being the only G7 country where employment rates have not recovered to pre-pandemic levels.
At the board’s inaugural meeting, members discussed new strategies to tackle the root causes of economic inactivity. These include addressing poor physical and mental health and ensuring that individuals who have been left behind are supported to re-enter the workforce. The group is expected to help shape the government’s upcoming White Paper, due this autumn, which will outline measures to improve the UK’s employment rate.
Government’s 80% Employment Target
The Labour Market Advisory Board has been established to support the government’s ambitious goal of achieving an 80% employment rate. At present, high rates of inactivity pose a major barrier to reaching this target, particularly with the post-pandemic surge in long-term sickness. The board’s work will focus on finding innovative solutions to these challenges, with the ultimate aim of driving up employment levels, improving health outcomes, and boosting the economy.
Liz Kendall MP, the Work and Pensions Secretary, described the current situation as a major obstacle to the country’s growth. She said:
“Spiralling inactivity is the greatest employment challenge for a generation, with a near-record 2.8 million people out of work due to long-term sickness. Addressing these challenges will take time, but we’re going to fix the foundations of the economy and tackle economic inactivity. The board’s knowledge, expertise and insight will help us to rebuild Britain as we deliver our growth mission, drive up opportunity, and make every part of the country better off.”
Impact of Health on Employment
Health Secretary Wes Streeting has previously emphasised the importance of reducing NHS waiting lists as a key element in improving both health outcomes and employment figures. The Labour Market Advisory Board’s first discussions examined how ill-health has contributed to economic inactivity and explored ways the government can support more people back into the workforce. This includes policies that aim to reduce waiting times for health services, enabling individuals to recover and return to work more quickly.
Paul Gregg, Chair of the Labour Market Advisory Board, highlighted the challenges facing the UK’s labour market:
“Having studied the UK’s labour market across several decades, it is clear that the current labour market faces a deep-seated set of challenges. We have seen a sharp increase in economic inactivity and long-term sickness, most notably in our young people post-pandemic. Further, real wage growth has been heavily suppressed for 15 years, hitting living standards and government tax revenues. Reversing these trends will be key to ensuring the long-term prosperity of the UK’s labour market.”
White Paper and Devolution Plans
The Secretary of State is expected to present a detailed White Paper in the autumn, which will include measures to devolve more power to local authorities. The aim is to enable regions to tackle inactivity with tailored work, health, and skills programmes. The government also plans to introduce a youth guarantee for 18 to 21-year-olds, along with a major overhaul of job centres, merging them with the National Careers Service to create a more streamlined support system for those seeking employment.
As the board continues its work, it is expected to generate new ideas and proposals to support the government’s efforts to revitalise Britain’s workforce and address the complex challenges that have emerged in the labour market post-pandemic.
