The good work effect How high-quality work can lead a jobs recovery 28 July 2026 The UK labour market has not fully recovered since Covid-19. Our economic activity rate has continued to lag behind the best-performing economies. We remain the only G7 economy where the employment rate has still not returned to its pre-pandemic level. Job vacancies are at a five-year low, and have a worrying place-based distribution: a large proportion of people on welfare benefits are in labour markets with very few vacancies. The most disadvantaged people, and the most disadvantaged local communities, have suffered worse from this situation, with the ongoing Milburn Review highlighting that if action is not taken, the number of 16‒25-year-olds not in education, employment, or training (Neet) in the UK – already the second-highest in Europe, after Romania – will increase to 1.25 million within five years. The inactivity problem is not exclusively one facing young people: wider economic inactivity has risen sharply in recent years, particularly among working-age adults with health conditions (Figure 1). As the Mayfield Review highlighted, it now stands at over one in five of the working-age population – much higher than leading countries such as the Netherlands (14.5%). If the government met its target to increase the employment rate to 80%, there would be 2 million more people in employment. To date, much of the debate about why the UK’s post-Covid recovery has been so weak has focused on worsening population health, NHS waiting lists, and shifts in preferences of workers (such as early retirement). In this report, we don’t challenge the validity of these arguments in offering a partial explanation of what has happened. Instead, we shift the debate in a different direction by asking how the nature of work itself – such as more precarious and lower-quality jobs – might be contributing to exits from employment. We suggest that the ability of workers to be well-supported by their...