Fast forward?

Where next for the labour market

The pandemic has had a profound effect on the labour market. The initial impact was seen in a spike of Universal Credit claims, with the furlough scheme meaning more of the later adjustment came from falls in hours worked rather than employment. Nonetheless, employment fell significantly with particular demographics, sectors and areas of the country harder hit than others.

The pandemic also saw profound changes to the way we live and work. People did far more online shopping, those able to worked remotely more often, and work in most sectors was organised differently to fit the new realities.

Now the economy is reopening and adjusting. Vacancies are at record levels, but employment remains lower then before the pandemic showing we need to do more to help those out of work find available work. People are flocking back to shops, bars and restaurants and more people are returning to the office. But it is unclear to what extent the economy and life will return to pre-pandemic patterns, or whether the pandemic has led to a permanent step change in longstanding structural shifts.

This report explores these issues, including through new polling of employers and employees, and identifies policy priorities to ensure we build an inclusive recovery and renewal of our labour market, economy and society.

The five policy priority areas identified in the report are:

  1. Extending flexible working. Support to businesses to implement flexible and hybrid working, potentially including a Flexible Working Hub of best practice and engaging employers through chambers of commerce, accountants, and colleges and training providers. Extend the right to request flexible working to day one of employment.
  2. Growing good quality local jobs. ‘Levelling up’ has become even more pressing and challenging as the pandemic accelerates some structural changes. The Government should invest in infrastructure, build in good work and training requirements, and enable local leaders to join up investment, regeneration, and employment and skills support in their areas, including linking to local Good Work Charters.
  3. Widening employment support. While vacancies are at record levels, unemployment and long-term unemployment remain higher than before the pandemic. We must ensure active support for all those that are out of work, particularly groups with lower employment rates like disabled people and young people not on benefits.
  4. Improving retraining support. More ambitious support for people wanting to retrain including: fast tracking furloughed staff who lost their jobs to support; extending the Lifetime Skills Guarantee to support retraining and modules of learning; and exploring the best way to help retrainers with living costs.
  5. Effective financial support and safe workplaces. The Government should restore the £20 uplift to Universal Credit and review eligibility and generosity of sick pay and support to support self-isolation and health more generally. Decisions about requiring employees to be vaccinated are for individual businesses and their staff, but the Government can help by providing clear guidance and enforcing safety standards