The UK labour market has not totally recovered since Covid-19. Our financial exercise charge has continued to lag behind the best-performing economies. We stay the one G7 financial system the place the employment charge has nonetheless not returned to its pre-pandemic degree. Job vacancies are at a five-year low, and have a worrying place-based distribution: a big proportion of individuals on welfare advantages are in labour markets with only a few vacancies.
Probably the most deprived individuals, and probably the most deprived native communities, have suffered worse from this example, with the continued Milburn Assessment highlighting that if motion is just not taken, the variety of 16‒25-year-olds not in schooling, employment, or coaching (Neet) within the UK – already the second-highest in Europe, after Romania – will enhance to 1.25 million inside 5 years.
The inactivity drawback is just not completely one dealing with younger individuals: wider financial inactivity has risen sharply in recent times, significantly amongst working-age adults with well being circumstances (Determine 1). Because the Mayfield Assessment highlighted, it now stands at over one in 5 of the working-age inhabitants – a lot larger than main international locations such because the Netherlands (14.5%). If the federal government met its goal to extend the employment charge to 80%, there can be 2 million extra individuals in employment.
Up to now, a lot of the talk about why the UK’s post-Covid restoration has been so weak has centered on worsening inhabitants well being, NHS ready lists, and shifts in preferences of staff (reminiscent of early retirement). On this report, we don’t problem the validity of those arguments in providing a partial rationalization of what has occurred.
As a substitute, we shift the talk in a distinct route by asking how the character of labor itself – reminiscent of extra precarious and lower-quality jobs – could be contributing to exits from employment. We propose that the power of staff to be well-supported by their employers throughout disruptions to their working life – reminiscent of an financial shock like Covid, or durations of ailing well being – is a essential and underexplored a part of the story on financial inactivity.
To research this query, we use a blended strategies method. Most of our evaluation is predicated on longitudinal survey knowledge from the large-scale UK family survey (Understanding Society), which is consultant of individuals in paid employment and covers the interval 2012‒25. We measure staff’ job high quality utilizing a multidimensional UK High quality of Work index, which captures the standard of staff’ jobs on 20 totally different indicators – together with job safety, flexibility, earnings, and office well being and security. We printed an accompanying supplementary report alongside this one, which gives a extra complete overview of the methodology underpinning this work.
Alongside this, we carried out qualitative interviews with 10 individuals with direct expertise of leaving paid employment and/or claiming out-of-work advantages in recent times. Members had been recruited by way of MIS Group and had been remunerated for his or her participation. All interviews had been performed on a semi-structured foundation. The findings from these interviews tended to corroborate the quantitative evaluation; we quote from them extensively all through this report. The names and genders of all contributors quoted on this report have been modified to guard their id.
We discovered that poor job high quality is strongly related to the probability of leaving work, with staff with decrease job high quality when interviewed within the prior wave (Wave T) more likely to depart employment when interviewed within the wave after (Wave T+1). The speed of exit rose markedly throughout the pandemic, with the character of the connection additionally altering in the direction of totally different types of non-employment and affecting these in different-quality jobs to various levels. These patterns stay sturdy even when accounting for particular person traits, suggesting that the character of labor itself could play an essential function.
We then examined which particular job high quality indicators could be driving this relationship between poor job high quality and job exit. We discovered proof that autonomy and voice within the office are significantly essential: jobs that allow staff to regulate hours, modify duties, or take day off when wanted usually tend to assist continued employment. Against this, roles which might be inflexible, insecure, or missing in managerial assist usually depart staff with little choice however to depart when their well being deteriorates. Qualitative proof highlights how exits are steadily the results of cumulative pressures, fairly than single shocks, and the way small variations in job design can decide whether or not people stay in work.
We additionally discovered that these dangers are concentrated in additional precarious types of employment, together with self-employment and zero-hours contracts. Whereas usually introduced as versatile, these roles steadily lack the protections and stability wanted to assist staff by way of durations of ailing well being. This implies that the rise within the degree and number of precarious employment could make the labour market more and more weak to rises in inactivity sooner or later.
Taken collectively, the findings level to the truth that rising non-employment can also be formed by modifications within the high quality and design of obtainable work. Coverage responses subsequently must transcend supporting people, and as a substitute deal with how jobs themselves can higher accommodate altering well being and circumstances.
From this evaluation, we propose that the federal government’s twin objectives of elevating job high quality and employment participation could also be mutually reinforcing, beneath the proper circumstances:
- Decrease-quality jobs are linked to larger exit charges: Staff within the lowest-quality fifth of jobs are considerably extra prone to depart employment (1.6‒3.4 instances, relying on the mannequin used), significantly following modifications of their well being. Low job high quality total is related to higher danger of exit from work, with some potential proof of a quasi-causal relationship.
- The Covid-19 pandemic created new vulnerabilities for staff in non-standard employment relationships, particularly the self-employed, and in sure sectors of the financial system. Earlier UK governments had been in a position to obtain rises within the employment charge partially because of rises in self-employment. Our evaluation suggests this pattern uncovered these staff to higher dangers throughout Covid-19. When the pandemic hit, it left a big proportion of staff weak – with few assist mechanisms to retain work when experiencing an episode of ailing well being. This poses a problem for the present authorities in selecting how you can get better the labour market.
- A mix of “wholesome job” traits is especially protecting for staff. Supporting present qualitative literature on this subject, and reinforcing the findings of earlier research usi[x] this report presents quantitative proof of a set of traits strongly related to decrease dangers of non-employment. Maybe unsurprisingly, this consists of job safety, however components reminiscent of worker-oriented flexibility, autonomy, and protections arising from steady employment are additionally related to it.
- There may be proof that “wholesome jobs” are particularly protecting for staff who expertise a worsening of psychological well being, or who develop a long-term well being situation, between waves. Wholesome jobs ‒ outlined right here as jobs with higher ranges of autonomy, job safety, and different options – had been disproportionately extra protecting in serving to stop labour market exit for staff who skilled a worsening of psychological or long-term well being than staff who didn’t. This implies these traits are particularly essential in holding those that expertise a health-related shock in work. They might, for instance, mirror having higher in-work protections to assist them handle a transition whereas working.
- Investing in “good work” is subsequently important to assembly the federal government’s employment targets, in addition to being a fascinating goal in itself. With no drive for a good-jobs-led financial restoration, the federal government will wrestle to realize a sustained larger employment charge. These in employment will proceed to be weak to ill-health-related financial shocks, as they had been in earlier crises. The danger will solely proceed as our society ages, as a result of rising numbers of individuals within the workforce should handle well being circumstances alongside paid work.
We finish the report with a top level view of proposals to enhance accessibility to good work for staff with long-term well being circumstances, which construct on the important safeguards launched within the Employment Rights Act 2025. We suggest the next:
- The federal government ought to expressly decide to a good-jobs-led financial restoration, rebuilding the labour market again to a greater state than it was earlier than the pandemic to construct resilience from future shocks. The incoming Prime Minister has made encouraging statements in regards to the function of high-quality work as a part of his drive to ship. There must be express recognition that with out a drive to enhance job high quality, staff on the backside of the labour market will stay weak to future disruptions, as they had been throughout the pandemic. NEF will probably be setting out a good-jobs-led financial technique in forthcoming analysis; a key factor have to be strengthening rights for self-employed staff and enhancing labour market alternatives obtainable to younger individuals.
- The federal government ought to develop a proper “work what you may” framework to permit people with well being limitations to work part-time and variable hours inside an agreed vary. This mannequin would assure a minimal core of hours whereas constructing in flexibility as capability modifications, with clear evaluate factors to evaluate progress. This is able to undertake the partial work or phased reintegration system utilized in different international locations, significantly Denmark’s Flexi-jobs scheme: sustaining labour market attachment with out requiring full restoration earlier than return.
- The federal government ought to introduce a particular monetary incentive for employers who rent staff in decrease conditionality teams who’ve been on advantages for a steady interval, reminiscent of a reduction or exemption on employer nationwide insurance coverage contributions. This might be built-in inside each the partial work scheme and the prevailing system of employer incentives for younger individuals by way of the Youth Jobs Assure and Youth Jobs Grant, though we propose this monetary incentive must be for all adults and never unique to the younger.
The total methodology paper for this report, Analysing the impact of job high quality on non-employment with longitudinal knowledge, is accessible to learn right here.
