A failing UK labour market requires government intervention

The writer is a Labour MP and the party’s shadow minister for employment and social security

A heartbreaking aspect of politics is the letters you get from people outside your constituency, without a full address, often about the deep problems they face. A gentleman from London wrote recently asking my advice about whether he would cope going back to work after so long out of it. He said he expected to feel embarrassed in a new job, but did I think he would get used to it? If I knew where he lived, I would write back with some encouragement. As it is, I can’t help wondering who will help him, given the current tight state of the labour market.

Not everyone in our country has the sense of fulfilment or the opportunity to develop at work that we would all like. There are many skilled, qualified people who are stuck in the jobs they can get, not the ones they want.

The Resolution Foundation think-tank found that one in five people are currently working below their skill level. That is both a terrible waste, and an indicator of how our broken labour market fails to value people. Back in the early 1900s, pioneers such as Eleanor Rathbone and William Beveridge conducted studies of the work that poor people were consigned to. They concluded that in order to get the best return on their time, workers needed help — and the right information — to reach their potential. Why have we forgotten this today?

We have rightly looked to the health of the nation — and the lasting effects of the pandemic — to uncover what might be undermining the UK’s labour market. But I think there is an additional problem: low ambition from the current government. We are losing people from the economy, and from better paid jobs, because we have no effective solution to get them the kind of work that will help support their personal and financial health.

It’s there in the numbers. In recent years, with the rise in economic inactivity post-pandemic, plus a stagnant economy, our employment rate has been less than buoyant. Last month’s Autumn Statement did little to improve prospects for the labour supply.

The progressive approach to failing markets is to intervene intelligently and make them work. Neither members of the public nor their potential employers are currently enthusiastic about turning to our network of jobcentres for help. So a Labour government would overhaul them, with the objective of changing the likelihood of people getting a good job.

Social security will always come with conditions. As Beveridge originally set out, and the New Deal in the 1990s affirmed, people have a responsibility to contribute. But the government has a non-negotiable responsibility, too: to provide the opportunity for meaningful, good work that pays decently and crucially offers pay progression. The government’s own pay progression review of 2021 found that only one in six people on low pay ever truly leave it. We will take on this inequity.

Our economy is riven with staff shortages, so we need recruitment plans that are tailored to local growth plans. If a city-region has ambitions for housing investment, then plans for the development of Labour’s proposed Technical Excellence Colleges must go with them. Likewise in life sciences, where cities seek investment for new lab capacity, there has to be a plan not just to recruit graduates from elsewhere, but to link local young people with opportunities across higher and further education.

We should end the defeatist attitude that people are fated to be stuck in jobs that don’t suit them. Not only is it economically inefficient to have people work below their skill level, it is also very worrying from a social point of view. This is a crucial part of Labour’s “securonomics”: there is an iron link between economic growth and the wellbeing of our people. Without acknowledging this, we cannot progress.