Mums hold the key to getting Britain working again

Britain has built up a lot of economic problems over the past 15 years – weak investment and productivity growth, contributing to an unprecedented pay squeeze and stagnating living standards. But there has been one metric at which we have excelled – getting more people into work.

Sadly this success story has been undone somewhat since the pandemic – while countries like France and Germany have seen their workforce grow (by 1.5 and 1.8 percentage points respectively among working-age people), the UK’s has shrunk (by 0.8 percentage points). An additional 830,000 people across Britain are now economically inactive – which can be bad for individuals’ living standards, and is definitely bad for the wider economy.

The need to get Britain working again is hugely important, and is rightly going to be a major focus in the Chancellor’s upcoming Budget. But identifying a problem is one thing, solving it is quite another.

Intuitively, it makes sense to focus efforts on getting those who have left the workforce during the pandemic to come back again. But encouraging people to ‘unretire’ is unlikely to work. That’s because the spike in early retirement seen since the pandemic has been concentrated among higher-paid professional workers (early retirements among many lower-paid workers actually fell). Two-thirds of these early retirees own their homes outright and therefore have low living costs. It will be very hard to persuade them back into work. Our efforts should be focused elsewhere.

There’s also been a rise in people who are out of work due to ill-health, with the number of working-age people who are out of work due to ill-health rising by 460,000 since the start of the pandemic to reach 2.5 million in late 2022. However, this is a much broader trend that predates the pandemic – it’s what happens when a country gets older, has a demographic bulge of people in their late 50s to early 70s, and a health service that is struggling to cope.

The sad reality is that while we should obviously try to do more to encourage people with long-term ill-health back into work, it’s really hard to make a difference and interventions often come too late. The best way to help these people to work is to stop them from exiting the workplace in the first place.

That same approach should now be applied for those who have to take time-off because long-term sickness – they’re far more likely to be able to return to their previous job with their employer, than navigate the jobs market from scratch, with a huge gap on their CV.

As well as learning from what has worked well for mothers in the past, and applying that success to other groups of workers, there’s also more we can do to help the next generation of mothers into work.

While maternal employment grew rapidly (by five percentage points) in the decade running up to the pandemic, a huge gap still exists between richer and poorer women. Just half of women aged 25-54 in low-income households are in work, compared to 94 per cent in high-income households.

Childcare costs and weak work incentives are major barriers to employment for low-income women, and both need to be addressed. Here we need to get the reform right. The most popular policy among politicians is expanding ‘free hours’ of childcare. But the evidence shows that this policy delivers an income boost to (often high-earning) working mums, not an employment boost for those who are less well off. A more effective approach would be to make Universal Credit more ‘female friendly’ with up-front support with childcare costs and Work Allowances – the part of Universal Credit that ‘makes work pay’ – targeted at second earners.

Boosting workforce participation is not going to be easy in the 2020s, set against the backdrop of the baby boomer generation retiring and ill-health on the rise. But it’s an issue that we’ve excelled at in the recent past, and can do so again. The upcoming Budget is the first big test of whether the Chancellor has understood that mums hold the key to getting Britain working again.

This article was originally published in Reaction