On Tuesday, the Labour government unveiled a new advisory board dedicated to addressing persistent issues in the UK’s labour market, with a sharp focus on reducing high levels of economic inactivity among working-age individuals.

The initiative, part of the broader "Get Britain Working" plan, aims to revive employment rates and stimulate economic growth, setting a bold target to achieve an 80% employment rate across the country.

The advisory board will be chaired by economist Paul Gregg, who emphasised the scale of the challenges facing Britain’s workforce. “We have seen a sharp increase in economic inactivity and long-term sickness, most notably in our young people post-pandemic,” Gregg noted. He also pointed to a prolonged period of wage stagnation that has left a lasting impact on living standards and government revenues.

“Real wage growth has been heavily suppressed 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,” Gregg added.

Post-Pandemic Labour Market Struggles

Britain’s economic recovery from the COVID-19 pandemic has lagged behind that of other major economies. According to official figures, 9.4 million working-age Britons were not in employment or actively seeking work as of mid-2024, while 2.8 million were out of work due to long-term sickness.

The surge in long-term sickness, particularly among younger populations, has been attributed in part to the aftermath of the pandemic, as well as the strain on the country’s National Health Service (NHS), which has been grappling with long waiting times and stretched resources.

These factors have contributed to the ongoing inactivity in the job market, limiting the country’s ability to recover economically.

Aiming for 80% Employment

The Labour Party, which has been in power since July, is rolling out its ambitious employment reform plan this autumn. Central to this strategy is the overhaul of job centres and the devolution of powers to local authorities, which the party believes will help tackle regional disparities and bring more people into the workforce.

The plan is designed to support the government's goal of achieving an 80% employment rate, a target that would significantly boost both productivity and economic growth. By addressing economic inactivity and fostering an environment conducive to job creation, Labour hopes to revitalise the UK economy, which has been hindered by slow post-pandemic recovery and stagnant wages.

Labour Market Data Expected to Show Mixed Trends

Later on Tuesday, labour market data is expected to reveal both positive and concerning trends. While strong employment growth is anticipated, wage growth is expected to cool. This mixed outlook underlines the ongoing challenges facing the UK job market, where the cost-of-living crisis and inflationary pressures continue to weigh heavily on workers.

The Labour Party’s new advisory board will focus on long-term solutions to these deep-seated issues. Beyond tackling economic inactivity, the board will work to ensure that the labour market can offer higher wages and improved conditions for workers, helping to lift living standards and secure long-term growth for the country.

As the Labour government prepares to roll out its reforms, the success of these initiatives will be critical in addressing the UK's long-standing labour market challenges and building a more prosperous future for workers across the nation.