In my previous article, I explored that the UK's employability system has reached an important inflection point. The diagnosis of the problems is well understood. Economic inactivity remains stubbornly high, health-related benefit caseloads continue to grow, and despite significant policy attention, the system remains fragmented and predominantly supply-led.
The encouraging news is that reform is happening. The Government has made meaningful progress over the past year. Through initiatives such as the Milburn Review, Get Britain Workingagenda, the creation of Skills England, the closer alignment of skills and employment policy, and the ongoing implementation of the Keep Britain Working review, there is clear evidence of a more active and integrated approach emerging. This is a positive direction of travel.
Too often, discussions about employability reform focus exclusively on what is still wrong with the system. Yet it is important to recognise that policymakers have begun addressing several long-standing structural weaknesses, particularly the disconnect between skills, employment support and economic growth.
Everyone knows reform of the system is necessary, so the focus needs to be on rewiring the future system differently.
The Missing Ingredient in System Design
One theme appears consistently throughout recent reviews, policy papers and market engagement exercises: employers matter.
That may seem obvious. After all, employment outcomes ultimately depend on jobs being available. Yet historically, employers have often sat adjacent to employability policy rather than being embedded within it.
Support has largely been designed around the job seeker and providers. Employers have typically entered the process much later, often as consumers of labour rather than active participants in shaping pathways into work. This is increasingly difficult to reconcile with the evidence. The Keep Britain Working review repeatedly highlights that health-based economic inactivity cannot be solved by government or employers acting alone and calls for a model based on shared responsibility between employers, employees and public services.
That represents an important shift in thinking. The question is whether the policy framework itself has caught up.
From Consultation to Co-Design
Many employers are already willing partners. Across sectors, organisations recognise the benefits of more inclusive recruitment, better retention of experienced workers, and earlier intervention when health conditions begin to affect employment.
The problem is often not willingness. It is knowing where to engage and how.
For many employers, the employability landscape remains difficult to navigate. Multiple programmes, providers, funding mechanisms and regional variations create complexity that can discourage participation or limit impact. This challenge has been recognised both within government reviews and across the employability sector more broadly.
As a result, many employers continue to play the role of stakeholder rather than true partner. That distinction matters. Stakeholders are consulted. Partners help shape outcomes.
If employability reform is to achieve its ambitions, employers need to be involved much earlier in the process:
- Defining local labour market needs.
- Shaping skills provision.
- Designing pathways into work.
- Supporting retention and return-to-work activity.
- Identifying where workplace adjustments can unlock participation.
In short, employers should not simply receive the outputs of the system. They should be core to the design of them.
What Employer-Led Reform Could Look Like
This does not mean shifting responsibility from government to business. Nor does it mean asking employers to solve economic inactivity alone. Rather, it means recognising where employment outcomes are actually created. Employment support may begin in a programme. Skills may be developed through training. But sustainable outcomes are realised in workplaces.
That is why some of the most promising developments emerging from the Keep Britain Working agenda focus on prevention, workplace health, retention and earlier intervention. The review explicitly describes the need to move away from a model where health at work is left largely to individuals and public services and towards one based on shared responsibility.
This is particularly important given the scale of the challenge facing employers themselves.
The review estimates that poor workplace health and sickness absence cost employers approximately £85 billion annually, while recruitment and replacement costs continue to rise.
Viewed through that lens, employer integration is not simply a social policy objective. It is an economic one.
Building the Next-Generation Employability System
Recent reviews such as Keep Britain Working have highlighted a simple reality: employment outcomes are not determined solely by the support available to individuals, but also by the willingness and ability of employers to create, adapt and sustain opportunities.
That means building a framework where employers are not seen solely as destinations for talent, but as active participants in creating opportunity.
A framework that:
- Uses labour market intelligence to understand employer demand.
- Makes it easier for employers to engage with support services.
- Incentivises retention and prevention, not just recruitment.
- Provides practical guidance on disability inclusion and workplace health.
- Creates stronger feedback loops between employers, providers and policymakers.
None of these ideas are radical. In many respects, they are already reflected in the direction of travel set out by recent government reviews. The opportunity now is to embed them more deeply into how the system operates.
Conclusion
The UK's employability reforms deserve recognition. The policy direction is clearer than it was a year ago, and important building blocks are being put in place. But reform will only achieve its full potential if employers move from the edge of the system to its centre.
Not to erode government’s role, but because employment outcomes depend on bringing together the organisations that create jobs with the organisations that support people into them. The next step in reform should not simply improve the employability system. It should rewire it around the reality that sustainable employment is ultimately delivered through partnership.
Footnotes