Major reforms needed to address ‘participation crisis’

The UK needs wholesale reform in employment support to reverse ‘a participation crisis’ which has seen a significant decline in its workforce, with 800,000 fewer individuals in work or seeking employment since the onset of the Covid pandemic, according to a new report.

The Working for the Future report, which says it provides a roadmap for the future, indicates that the UK is an outlier among developed nations, with employment rates falling rather than rising post-pandemic, with fewer young people in work, more older people out of work and more people off work with long-term health conditions. It says virtually all of the increase in the number out of work is accounted for by people who last worked before the Covid-19 pandemic even began or who have never worked at all. It calculates that the ‘participation crisis’ has led to a £16bn annual loss in tax receipts.

The report is the work of the Commission on the Future of Employment Support, which has been managed by the Institute for Employment Studies in partnership with abrdn Financial Fairness Trust. It argues for far-reaching reforms to help reverse significant falls in labour force participation, address insecurity and poverty in work and tackle long-standing inequalities in the labour market.

It calls for an ambitious approach to the government’s new Jobs and Careers Service, making it more accessible to all. It says there should be a new online employment service, an on the high street network of employment, skills and careers centres that are open to all and on the doorstep integration of employment and careers advice within wider public, community and voluntary services.

It says this should be complemented by a single system for employers, which should include a clear offer around advertising and filling jobs, brokering people into work and providing specialist advice on workplace support for specific disadvantaged groups like disabled people, older people and parents.

It also recommends New Labour Market Partnerships within local areas so that ‘work, health and skills plans’ can enable areas to join up services, broaden access to support and tailor provision to local needs. And it calls for a rowing back of the kind of punitive, sanctions-led approach taken by the previous government, including the ending of the ‘35-hour rule’ for jobseekers, removing requirements to undertake ‘work related activity’ where people have significant health conditions or very young children and removing ‘worksearch’ and ‘work availability’ requirements from people in work and on low incomes. It advocates implementing a clearer separation between benefits administration and employment support and replacing the Claimant Commitment with forward-looking Action Plans.

The report says this should be backed up by a clear framework for a reformed system, across national and local services, underpinned by specific objectives on raising employment, tackling poverty at work and reducing inequalities; a guarantee that if you want help you will be able to get it; and common standards for the quality of services for individuals and employers.

There are also recommendations for reforms to the role of central government and for the full devolution of employment support to Scotland and Wales as occurs in Northern Ireland.

The Commission specifies the support needed for both younger and older people affected by economic inactivity. It says older people should be a key focus within the new Support Guarantee and that this should include far greater use of specialist provision and co-located delivery to reach those who are not engaged with support. The report states: “We need to ensure that both employment services and workplace practices are far more age inclusive: by setting clear performance measures within services to narrow gaps in outcomes for older workers; and by government getting behind the Age Friendly Employer Pledge to promote more age positive employment practices.”

The Commission says that the reforms would more than pay for themselves with only marginal improvements in take-up and outcomes from employment support.

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