New Labour Market Advisory Board launched to address rising economic inactivity

A new body has launched to advise government on addressing the rising economic inactivity among working age people in the UK.

The Labour Market Advisory Board brings together experts from across business, industrial relations and academia to advise government on how to bring down to the rising numbers of people out of work due to poor physical or mental health.

The Board will develop new ideas and initiatives for the Work and Pensions Secretary, Liz Kendall, to consider as she sets about bringing down the levels of economic inactivity, with the government setting the ambition of achieving an 80% employment rate: the UK is the only G7 economy where inactivity rates remain below pre-pandemic levels.

Currently, 9.4 million across the UK, are considered economically inactive, defined as being of working age but not currently in work or actively seeking employment. In the North-west, this figure in just over 1.1 million, or a 23.6% economic inactivity rate.

Work and Pensions Secretary, Liz Kendall MP, said:

“Spiralling inactivity is the greatest employment challenge for a generation, with a near record 2.8 million people out of work due to long-term sickness.

“Addressing these challenges will take time, but we’re going to fix the foundations of the economy and tackle economic inactivity.

“The board’s knowledge, expertise and insight will help us to rebuild Britain as we deliver our growth mission, drive up opportunity and make every part of the country better off.“

The Board’s first meeting, held on Monday 9th September, examined the impact of ill-health on inactivity and how the Government can support more people into good work.

Paul Gregg, Chair of the Labour Market Advisory Board, formerly Director of the Centre for Analysis of Social Policy at the University of Bath, said:

“Having studied the UK’s labour market across several decades, it is clear that the current labour market faces a deep-seated set of challenges.

“We have seen a sharp increase in economic inactivity and long-term sickness, most notably in our young people post-pandemic. Further, real wage growth has been heavily supressed for 15 years hitting living standards and government tax revenues. Reversing these trends will be key to ensuring the long-term prosperity of the UK’s labour market.

“I look forward to working with members of the board and the Secretary of State to support her vision for growth and examining positive solutions to address inactivity and harness the true potential of the UK’s labour market.“

The launch of the Labour Market Advisory Board comes ahead of a White Paper due to published in Autumn that will set out plans to devolve greater powers to local government around work, health and skills plans.