As a big, open, services-led economy, making the most of the talent of our islands – creating opportunities to work, progress and innovate – matters more now than ever before.
Our debate about productivity and employment is dominated by everything except how we organise work. No attempt to drive growth will succeed without a proper appreciation of workforce issues. At the REC, we see the issues that employers across the UK are wrestling with every day – but we also see the opportunities and growth potential to be had. Placing a million temps into work every day, as well as almost a million people into new permanent jobs every year, we know the defining characteristic of the UK labour market is choice.
To discover more insights read the full Manifesto of Growth.
Understanding today’s people and labour market challenges
The Government should put people issues and the labour market at the heart of a new Industrial Strategy that prepares the UK for 2030. Any new Government must embrace this – along with the recognition that demand for temporary work by both employers and individuals is increasing. Better support for flexible forms of working will add dynamism to our labour market. To build a better understanding of today's labour market, government should:
- Work with businesses and employee representative bodies to develop a Workforce Plan for the UK. It must make skills policy more suited to the needs of our economy – but it must also go beyond skills (including transport, childcare, immigration).
- Conduct a Workplace Employment Relations Study (WERS). This will provide the foundation for an evidence-based, robust workforce strategy. The survey will offer insight into how the labour market is functioning, and what workplace performance is really like.
Supporting our labour market transition by preparing for the future
Better aligning the skills system and working with businesses and labour market experts to understand how people work, what jobs they want, and how to motivate them is critical for future growth. In the last few years, we have seen increases in the so-called “gig economy” and other flexible working practices, notably as economic inactivity has risen and demands between the home and workplace have blurred. Recruiters are on the frontline of understanding and managing these issues. Agency work is well-regulated, and we should apply the same standards to emerging forms of flexibility to protect standards and opportunity. To prepare for our future labour market, we recommend:
Supporting local jobs through Local Skills Improvement Plans/LSIPs model. Labour market experts should be represented across (LSIPs) in England. This will allow businesses, education and training providers to hear directly from recruiters about what local jobs are in demand and how work is changing.
Introducing immigration policy that supports employer needs. The increased salary threshold for the Skilled Worker Visa needs a rethink. Successful modern economies are international but higher thresholds sends the wrong signal around the world, splits up families, and robs the UK of key people at a time of real shortages. Survey after survey shows people support immigration by those who are here to work, pay tax, and build a life. Public policy should reflect this. We also believe the Government should conduct an impact assessment into its policy to reduce visas for dependents of those on Health and Social Care visa routes and whether this exacerbates labour market shortages.
Embedding net zero and tech change into education to enable future employment needs. Continue building on the Gatsby Benchmarks to ensure every young person gets effective careers advice with a clear understanding of career pathways, particularly in emerging sectors that support Net Zero and technology change. Use schemes like Kickstart and Restart to promote the uptake of digital and green skills training.
Establishing the UK as a world leader in the safe and ethical use of AI. Develop an AI assurance framework and work with employers to promote best practice around its safe and ethical use.
Boosting workforce productivity and driving down inactivity
Temporary and flexible work is often a catalyst for older workers, workers with long-term health conditions, younger workers and underrepresented groups to access the labour market. We have to get people into work, and that means understanding and addressing the barriers to that. This will require investment in key infrastructure, like reliable public transport and sufficient childcare support. Our specific recommendations include:
Reform the Apprenticeship Levy to fund high-quality, modular training to enable more people, including temporary workers, to train and fill vacancies.
Expand the eligibility for 30-hours childcare entitlement to parents or carers in training or education.
Reform public sector procurement processes to get better value for taxpayers and efficiency for service providers.
Mandate ethnicity and disability pay gap reporting for larger businesses to further diversify the labour market.
Regulating for a sustainable and dynamic labour market
Nearly half of the UK working population works in a non-permanent, flexible way. Too often, agency workers are forced to work around legislation designed for employees in permanent roles, resulting in confusion and sometimes a lack of clarity about the rights they have. Specific recommendations include:
Review and revise employment laws to reflect the increasingly flexible way that people work. We'd recommend starting with the completely outdated Working Time Regulations - enacted in 1998.
Introduce regulation for the whole labour supply chain - including umbrella companies and joint employment models - bringing them under the scope of the Conduct of Employment Agencies and Employment Business Regulations 2003.
Introduce a properly-resourced Single Enforcement Body (SEB) to improve coherence between departments, support better compliance and provide more clarity on worker rights.
Engage your local MP to advocate for issues that impact your business
Now is the time to take action and engage your local MP to advocate for issues that impact your business. Drive positive change by reaching out to your local MP about how they can help resolve the pressing challenges facing the businesses. Please use this template to amplify the business community's voice.
To discuss our recommendations in more detail, please get in touch:
REC Director of Campaigns and Insights
REC Manifesto - Dynamic Labour Markets for Growth (2024)PDF
The REC Manifesto aims to help policymakers better understand the crucial role of the labour market as a strategic driver of economic growth in the UK. It explains how targeted policy interventions can help our diverse workforce spur economic growth, enhance public services, and boost productivity - making the UK a competitive place to live and work.