Navigating the Challenges of Economic Inactivity: Strategies for Inclusive Employment

We believe in the power of framing challenges in the positive

Last week there was a lot of attention brought to the “economically inactive” and ways in which they can be encouraged to return to work.

Let’s start with addressing the question - what does “economically inactive” mean? Its technical definition is “People not in employment who have not been seeking work within the last 4 weeks and/or are unable to start work within the next 2 weeks”. For the non-technical, what you need to know is that nearly a quarter of the UK working age population are classified as such. That’s one out of every four people. In other words, it’s a lot and many of the people that the Good Jobs Project wants to support fall into this category,

As an organisation, our approach to this challenge is to highlight the transformative power of framing things in the positive. We aim to ignite a meaningful conversation focused on driving positive change through the actions of all actors. Our contribution to the conversation is about helping to find out what can be done to support employers to proactively set up their jobs and seek these individuals for their roles.

A steadily growing challenge

The recent attention on the economically inactive is for good reason and people are increasingly calling into doubt that increases in this figure are made by people who genuinely can’t work. Here I’d like to draw attention to Figure 1 and specifically to the remarkably steady increase in people on Universal Credit in the ‘no work requirements’.

FIGURE 1: UNIVERSAL CREDIT - NO WORK REQUIREMENTS

Source: DWP, Universal Credit statistics, 29 April 2013 to 11 January 2024

This group of 2.3 million people stands out. Many argue that the reasons they are signed off from not having to look for work are spurious, while others staunchly defend them. The truth, as ever, will lie somewhere in the middle. Importantly, there are many actors that need to be looked at. From those who create the different classification categories in the first place, to those that assess and sign off the individuals, to the benefits that people are eligible for, to the skills that they possess, and to the jobs that they can move into.

While a whole system approach is needed if we are to get those that can and want to work, back to work, our main focus is on the latter as this is often overlooked.

Supporting employers to maximise their potential in Inclusive Hiring

Many of the marginalised groups are some of the most vulnerable in society. This means that if the welfare system is being used as a tool to encourage them into work, it is important that they are not stranded with no social safety net and no suitable jobs to move into. This is why it is so important to think about the employer. They have a huge role in ensuring that their roles are inclusive and accessible.

“As well as investing more in skills, it means removing barriers to work and ensuring job seekers are well prepared to succeed in the workplace.  Employers offering fairer and more flexible workplaces are often more successful at attracting and retaining talent in a competitive labour market.” - Jane Gratton, Deputy Director Public Policy, British Chambers of Commerce

While many employers would classify themselves as inclusive, many will also have blind spots. The kinds of market interventions that would support them are ensuring they 1) have the knowledge and skills to make their roles accessible in the first place, and 2) equipping them with the know-how to target and engage with marginalised communities.

The Flexible Working Bill came into force this month. It is an example of a law that can influence business behaviour in lowering their barriers. Workers in England, Scotland and Wales can now ask for flexible work arrangements from day one. The term “flexible work” might make people think about hybrid work, but it includes many more options than that, such as part-time, flexitime, job sharing, staggered shifts and so on. This could have huge benefits and make work way more accessible to a huge number of people that have found it hard to access jobs. From parents and carers, to people with disabilities and the neurodivergent.

So what?

Especially in times of significant change, such as an election year, it’s fair to ask “Where do we go from here?” The Good Jobs Project continues work with business leaders, investors and policy makers to come up with ways that employers are:

1. More informed about the value of recruiting marginalised people.

2. Encouraged and, where necessary, incentivised to recruit them.

3. Supported with the knowledge, tools, and partnerships to make it easier for them.

If you have any questions or comments, please reach out to harry.brown@re-generate.org.

A closing note on the shifting employment landscape

Some recent statistical releases from the Office for National Statistics (ONS) show how different the labour market is now compared to when we started the Good Jobs Project. While the context is changing from a paucity of easily available talent that was stifling business growth, to an opportunity to tackle the economically inactive issue. The need to look at ways to help people from marginalised backgrounds remains and there is still a need for the Good Jobs Project to keep a focus.

There were, and still are, hundreds of thousands of people from marginalised backgrounds for whom work provides not only a route away from the risks of poverty, but also provides dignity and a sense of purpose, and they can be highly valuable members of staff.

In 2022 vacancies were at an all time high (1.3 million!) and at the same time the unemployment rate was extremely low. In fact, the number of vacancies outnumbered the people available to fill them. To say that this was challenging for employers is an understatement.

Fast forward to today, in the Spring of 2024, according to the latest ONS release there are 916,000 vacancies (Figure 2). Although numbers continue to decrease it is still an extremely large number and above pre-Covid levels. Interestingly, the only business size band where vacancies increased, was for business with 10-59 employees, reaffirming that SME’s are an extremely important part of our economy. The latest statistical release on employment figures from the ONS also show a slight increase, going from 3.8% in Oct-Dec 2023, to 4.2% in Dec-Feb 2024 (Figure 3).

FIGURE 2: VACANCIES

Source: ONS, Vacancies and jobs in the UK: April 2024