The UK labour market has not totally recovered since Covid-19. Our financial exercise fee has continued to lag behind the best-performing economies. We stay the one G7 financial system the place the employment fee has nonetheless not returned to its pre-pandemic stage. 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 essentially the most deprived native communities, have suffered worse from this example, with the continued Milburn Overview highlighting that if motion isn’t taken, the variety of 16‒25-year-olds not in training, 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 downside isn’t completely one going through younger individuals: wider financial inactivity has risen sharply lately, notably amongst working-age adults with well being situations (Determine 1). Because the Mayfield Overview highlighted, it now stands at over one in 5 of the working-age inhabitants – a lot greater than main nations such because the Netherlands (14.5%). If the federal government met its goal to extend the employment fee 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 (resembling early retirement). On this report, we don’t problem the validity of those arguments in providing a partial clarification of what has occurred.
As a substitute, we shift the talk in a distinct course by asking how the character of labor itself – resembling extra precarious and lower-quality jobs – is perhaps contributing to exits from employment. We advise that the power of staff to be well-supported by their employers throughout disruptions to their working life – resembling an financial shock like Covid, or durations of in poor health well being – is a vital 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 lately. Contributors had been recruited by way of MIS Group and had been remunerated for his or her participation. All interviews had been carried out 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 individuals quoted on this report have been modified to guard their identification.
We discovered that poor job high quality is strongly related to the chance 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 direction of totally different types of non-employment and affecting these in different-quality jobs to various levels. These patterns stay strong 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 is perhaps driving this relationship between poor job high quality and job exit. We discovered proof that autonomy and voice within the office are notably essential: jobs that allow staff to regulate hours, modify duties, or take day without work when wanted usually tend to assist continued employment. Against this, roles which are 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 incessantly the results of cumulative pressures, somewhat 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 offered as versatile, these roles incessantly lack the protections and stability wanted to assist staff by way of durations of in poor health well being. This implies that the rise within the stage 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 accessible work. Coverage responses subsequently have to transcend supporting people, and as a substitute deal with how jobs themselves can higher accommodate altering well being and circumstances.
From this evaluation, we recommend that the federal government’s twin targets of elevating job high quality and employment participation could also be mutually reinforcing, beneath the precise situations:
- Decrease-quality jobs are linked to greater exit charges: Employees within the lowest-quality fifth of jobs are considerably extra more likely to depart employment (1.6‒3.4 instances, relying on the mannequin used), notably following modifications of their well being. Low job high quality total is related to larger 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 fee partially because of rises in self-employment. Our evaluation suggests this pattern uncovered these staff to larger 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 in poor health well being. This poses a problem for the present authorities in selecting find out how to recuperate the labour market.
- A mixture of “wholesome job” traits is especially protecting for staff. Supporting present qualitative literature on this matter, 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 contains job safety, however elements resembling 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 larger 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 preserving those that expertise a health-related shock in work. They might, for instance, replicate having higher in-work protections to assist them handle a transition whereas working.
- Investing in “good work” is subsequently very 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 battle to realize a sustained greater employment fee. These in employment will proceed to be weak to ill-health-related financial shocks, as they had been in earlier crises. The chance will solely proceed as our society ages, as a result of growing numbers of individuals within the workforce should handle well being situations 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 situations, which construct on the very 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 and not using 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 can be setting out a good-jobs-led financial technique in forthcoming analysis; a key aspect should be strengthening rights for self-employed staff and enhancing labour market alternatives out there to younger individuals.
- The federal government ought to develop a proper “work what you’ll be able to” 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 may undertake the partial work or phased reintegration system utilized in different nations, notably Denmark’s Flexi-jobs scheme: sustaining labour market attachment with out requiring full restoration earlier than return.
- The federal government ought to introduce a selected monetary incentive for employers who rent staff in decrease conditionality teams who’ve been on advantages for a steady interval, resembling a reduction or exemption on employer nationwide insurance coverage contributions. This could possibly 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 recommend this monetary incentive must be for all adults and never unique to the younger.
The complete methodology paper for this report, Analysing the impact of job high quality on non-employment with longitudinal knowledge, is on the market to learn right here.