Economic inactivity, a measure of the number of people out of work and not seeking employment, made headlines in early 2024 because stark figures showed that the UK remains the only G7 country that has higher levels of economic inactivity now than before the pandemic.
2.8 million people out of work due to long-term sickness with causes such as mental health, heart disease and musculoskeletal conditions sited. Other factors driving inactivity include older workers taking early retirement, people staying at home to care for relatives, higher rates of mental ill-health and young people studying.
This is the highest figure since 2012 with a steep increase from 2020. Here in the north, economic inactivity in 16 – 64 year olds sits at 26.3%, higher than the national figure of 21.9%, with Cumbria lower at 19.6% . The impact of this is a huge burden to the economy, productivity thwarted, growth stunted, a decline in living standards and in addition difficulties with recruitment for employers already suffering skills shortages.
Getting people into work appears to be a priority for successive Governments and joined-up health and employment support is what is needed to get people back into work and stay in work.
The current Government’s has just released it’s £240m Get Britain Working White Paper with the intention of achieving an 80% employment rate – but will it deliver results? Plans include reform of job centres, work accessibility for people with disabilities and health conditions and access to work and learning opportunities for young people.
First and foremost comes the Governments pledge to ‘fix’ the NHS in 20 of the Trusts across England with the highest levels of economic activity and expand access to mental health support. The paper also includes eight trailblazer areas which will promote joined up health and skills support. The north east will be one of three trailblazer areas for NHS accelerators to prevent workers from exiting the labour market completely
Throwing money at the NHS is not enough to fix it and any reform of the NHS will be difficult and take time. There remains no clear plan, and even following the Labour Government ‘reset’ of December 2024 the details is not there to show how waiting lists will be reduced and people able to see a GP when they need to.
The white paper includes an overhaul of the Jobcentre system where this will be brought together with the National Career’s Service to focus on skills and careers rather than the management of benefit claims. A radically improved digital offer is to be welcomed with use of AI to offer up to date information on relevant jobs and skills support.
However attention must be given to the relationship between education, employers, the careers service and Jobcentres as currently less than 1 in 10 employers use Job centre services or see them an effective means for recruiting staff. (CIPD)
The ‘youth guarantee’ is the Government’s pledge to provide all 18-21 year olds with access to apprenticeships, training, education or help finding a job. Investment is being made into eight youth trailblazer areas (including the Tees Valley) which are where young people are most at risk of falling out of education or employment. A move to a more relevant and flexible growth and skills levy is a positive move however only by guaranteeing any young person under 24 (as defined by the ONS, rather than the current Governments definition of 18-21) a specific and detailed apprenticeship guarantee. Thus making apprenticeships a viable alternative to university for young people and a viable pathway into a career. Equipping young people with the skills employers are looking for is vital at all levels.
The ‘connect to work’ scheme is to be welcomed which will see voluntary and meaningful opportunities for those with health conditions, disabilities or more complex barriers to work.
£15m is to be allocated to regions outside of the trailblazer areas to develop local solutions to reduce economic inactivity in line with local growth plans. A positive move that recognises local decision makers are key to understanding local communities and ensuring that programmes are tailored and targeted to local need. However research suggests one off investments do not tackle issues that are embedded and certainly not in the medium and long term. Funding would need to be sustained into the future and areas of targeted activity supported to actively evaluate what works and what doesn’t in any given area.
It is agreed that employers can play a vital role in ‘stemming the flow’ of people leaving the workplace because of ill-health, therefore a review of practices amongst employers , stakeholders, health professionals, and employees is a reasonable next step. Business can undoubtedly put into place a number of reasonable adjustments and flexible employment practices to help attract and retain people in the workplace. However this will come at a cost, and a cost in addition to recent Government proposals on employment rights and increases in Employer’s National Insurance contributions and the minimum wage announced in the Autumn Statement 2024.
The Get Britain Working White Paper does provide a framework for addressing some of the key barriers to workforce participation. However, its success will depend on the Government’s commitment to a long-term cross departmental approach that combines tailored support, systemic benefits reform, and a renewed focus on retention and prevention. Currently there remains some significant unanswered questions, and substantial challenges ahead.
None of the proposals explicitly acknowledge how difficult the complex nature of the task in identifying the economically inactive and providing solutions to retail or get people back int work. Quite often the individuals who most need support are the hardest to identify as they may not be in the benefits or employment support system. The factors that lead to economic activity can also more often than not be multi faceted – with physical and mental health issues, sitting alongside barriers to work such as family / caring responsibilities and other issues like loss of confidence and self-esteem or physical barriers like the basic ability to get to and from work. An immediate and all-encompassing solution will not be immediate. The greater focus should initially be on retaining those in work and stemming the flow of people leaving the labour market. That includes immediate action on workplace adjustments – there does not need to be a 6-month review to tell employers that.
Greater attention is required for SMEs. They often don’t have the resources to invest in prevention, early intervention and rehabilitation around occupational health. DWP figures show that only 18% of workers employed by an SME have access to occupational health, compared to 45% overall.
The focus on young people is right, however attention also needs to be placed on older workers whose skills, knowledge and experience are invaluable and are often engaged in mentoring younger people entering the workforce. Older workers also need support to continue to thrive in the workplace and reasonable adjustments and flexible working practices should be common place.
Delivering the changes proposed over the long term will likely require additional investment at the next Spending Review, and yet in the 2024 Budget the Government committed to cutting £3 billion from benefits expenditure in the years ahead. Critically, we will have to wait until Spring 2025 for more detail on how changes to the Work Capability Assessment – which could impact over 400,000 people – will contribute to these savings.
With no timeline to achieve the 80% employment target, the Government has yet to make clear when it expects the impacts of the reforms set out in the White Paper to bear fruit. A reasonable starting point but much more to do in order to deliver results.
Data source; ONS
