There has been a rise in “economic inactivity” in the UK among people of working age since the start of the COVID-19 pandemic. Although the trend peaked last year, an additional 420,000 people are now in this category compared with early 2020.
People classed as economically inactive are neither working nor actively seeking employment. They include students, retired older people, and those in poor health or caring for others at home. Helping these people return to work would alleviate current UK labour shortages that are increasing workloads for existing staff, limiting output and business growth.
According to the Annual Population Survey from the Office for National Statistics, there are around 1.65 million inactive people in the UK that say they would like to work, but they need support. There have been calls to widen access to existing UK government-funded programmes and make services more tailored to people’s needs.
But people who are economically inactive are not typically well served by mainstream national employment support. Inactivity rates vary widely between areas, and have done for many years. For example, in 2022 in East Lindsey, Lincolnshire, 36% of the working-age population was economically inactive, whereas it was just 9% in Wandsworth.
Our joint research with Anne Green from the University of Birmingham and Paul Sissons from the University of Wolverhampton, shows a more local approach to employment support could help tackle this challenge.
This would involve working with local policymakers and organisations to design policy and programmes. Such localised initiatives could focus on helping people with multiple or complex barriers such as debt, poor health and limited childcare – depending on the most pressing issues in the area. These employment support services could also prioritise moving people into better-paid work, rather than the first job that becomes available.
What are the benefits of a more local approach?
Localising employment support could address gaps in the help that is already on offer, while reducing duplication between different government services. Involving local stakeholders in designing employment support could also enable policy to be better targeted.
For example, Connecting Communities was an employment support pilot that ran in the West Midlands between 2018 and 2021, as part of a government pilot employment scheme. It took a place-based approach to employment support, offering tailored, intensive support to people in nine neighbourhoods.
In order to reach people who do not traditionally engage with employment support, providers varied how and where participants were engaged. For example, they sought to facilitate engagement by reaching out to people at food banks, community centres and supermarkets.
An evaluation of the scheme by the Institute for Employment Studies and Birmingham University’s City Region Economic and Development Institute (City-Redi) suggested that personalised, place-based employment support programmes can be effective in reaching people with significant barriers to work. It can also help participants become more aware of, and work towards, employment opportunities.
Other criticisms of mainstream provision are that it emphasises sanctions rather than support. After a pandemic lull, the number of applied benefit sanctions reached 52,000 in March 2022. Most sanctions are imposed for fairly minor issues, such as missed or late arrivals at meetings. Research on sanctions also suggests there is little accountability for the decisions made by employment advisers.
Some evaluations suggest a local approach that builds more trusting relationships between jobseekers and advisers could be more successful in moving people into sustainable employment. Another opportunity lies in developing local approaches that extend access to support to economically inactive people, rather than narrowly targeting it at those on benefits who are required to actively look for work.
Why isn’t this happening?
The UK has traditionally pursued a highly centralised approach to employment support. Local Jobcentres mainly implement national policy priorities. The support on offer is relatively limited, covering work search reviews and guidance, vacancy referrals, and access to some training, education and work experience programmes.
This is also largely targeted at moving active jobseekers on benefits into a job, so will exclude many who are economically inactive. To keep their benefit payments, jobseekers are required to engage with this provision and to meet a range of requirements set by their adviser.
Local councils and authorities do not have the power to implement locally specific employment support programmes right now. Fewer evaluations exist of locally designed policies than nationally designed policies. However, some recent government pilots have explored the potential to pursue different approaches to employment support in different city regions.
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The Local Government Association has called for further devolution and partnership working under a “Work Local” model. This would enable a more integrated and supportive approach.
And, while not a central theme in its 2023 budget, the government did announce a trial of an integrated approach to work and health support in local areas. It also promised a “co-design approach” to all future contracted employment support in Manchester and the West Midlands. The Labour Party also wants to expand employment support, including devolving it to local authorities and embedding career advisers in health services to help people into work.
Recent proposals for local approaches to employment support are a step in the right direction, but they are unlikely to bring inactivity levels down. Comparatively speaking, the UK spends relatively little as a percentage of its GDP on active labour market programmes, including public employment services. The government needs to focus more on how national employment support is targeted and funded. The reliance on sanctions to push people into the first job they can find is also not working.
Overall, our research indicates that a different approach is needed. Initiatives that fit people to jobs that more closely meet their requirements, and that also align with local needs, could help get people back to work and tackle the labour shortages that are damaging the UK economy.
