Mental health and chronic pain are having the most significant impact on economic inactivity rates in Scotland, according to a new report from the Scottish Parliament’s Covid-19 Recovery Committee.
Its latest report considered the impact of the pandemic on Scotland’s labour market, looking specifically at long-term illness and early retirement as drivers of economic inactivity.
The committee found that although the pandemic has not significantly impacted economic inactivity in Scotland, it has clearly highlighted the extent to which a healthy working-age population is required to sustain a healthy economy.
MSPs heard that implementing remote and/or flexible working practices may improve employees’ wellbeing, bring more people into the labour market - including disabled people and people with chronic or mental illness - and support older workers to remain in the labour market for longer.
However, evidence from employers highlighted that many employers, particularly small and medium-sized enterprises (SMEs), require additional support to implement flexible working and improve reasonable adjustment policies.
The report also expressed disappointment that due to budgetary pressures, the Scottish Government’s plans for a Centre for Workplace Transformation, which would seek to embed some of the learning gained from the pandemic, was not delivered on target in 2022.
Additionally, the committee noted that best practice from wrap-around employability services, like the Fair Start Scotland programme, which provides tailored support to get working-aged people who are disengaged from the labour market back into employment, should be shared across all of Scotland’s local authorities.
Committee convener Siobhian Brown said: “Whilst our report found the pandemic has not had a significant impact on economic inactivity levels, issues such as poor mental health and chronic illnesses, are part of the complex challenges to Scotland’s economic and social recovery from Covid-19.
“Increased partnership working between the Scottish Government and employers to support investment in employees’ wellbeing and embedding post-pandemic opportunities for flexible working is crucial to supporting more people into the labour market.
“Remote and flexible working practices could also support more disabled people and those living with chronic health or mental health conditions into the workforce, whilst also enabling older people to stay in the labour market for longer.
“It's important that as a priority, the Scottish Government sets out what additional support it is providing for employers to develop practical resources to support the adoption of flexible working policies and share best practice, which are vital to improving Scotland’s economic activity levels.”
The Scottish Government estimates poor mental health currently costs Scottish employers more than £2bn annually. For every £1 employers invest in mental health support for their employees, they will receive an estimated £5 return on their investment, according to the committee's report in December.
It noted that “encouraging greater investment in this area is likely to support a more resilient workforce for the future and be particularly beneficial in sectors where employees are experiencing lasting pressures from the pandemic, such as health and social care”.
The committee also sought to understand the extent to which Long Covid has been contributing to economic inactivity since the start of the pandemic and has therefore decided to consider this further in a separate inquiry, launched on 12 January.
Dr Liz Cameron, chief executive at the Scottish Chambers of Commerce, said: “Long-term sickness, including long Covid, has invariably played a key part in discouraging people, particularly older workers, to staying in the labour market - this has been a large driver in the rise in economic inactivity over the past two years, along with those taking early retirement.
“As Scottish businesses face acute labour shortages across the board, it has never been more important to work together to support people of all ages to develop their knowledge and skills to fill gaps in the labour market.
“The business community stands ready to work together with government, agencies and partners to ensure everyone can play their full part in the workforce.”
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