Employment support in Wales is changing, with the UK Labour Government committing to the devolution of all non-Jobcentre Plus employment support programmes.

Learning and Work Institute (L&W) analysis indicates an estimated £47 million will be provided through devolution to deliver additional employment support in Wales. This is a key moment for Welsh Government to design and deliver employment support tailored to the needs of communities across the country.

This change comes at a critical time when people in Wales are facing significant, intersecting, labour market challenges:

• Wales experiences higher rates of economic inactivity (18%) compared to England (16%). Disability and poor health are the main cause of this in Wales, with 8% of the working-age population economically inactive for this reason.
• Women are significantly more likely to be economically inactive than men (at a rate of 22% compared with 15%), in part driven by women taking on more responsibility for looking after home and family.
• Economic inactivity is also more likely to affect those from minoritised ethnic groups compared to those from White backgrounds, at rates of 24% and 18% respectively.
• Regional differences impact peoples’ outcomes, with employment rates shaped by a combination of economic, demographic and structural factors. Mid Wales, for example, sees the biggest employment gaps for disabled people and those with long term health conditions, possibly linked to its rural economy and infrastructure challenges.

To understand how the employment support system can best serve the needs of those furthest from the labour market, focus groups were conducted with people with lived experience of economic inactivity. They told us the key barriers to finding and sustaining work include:

• Lack of affordable childcare options, and being unable to secure flexible working arrangements
• Limited local job opportunities, compounded by poor public transport infrastructure
• Negative past experiences of formal employment support
• Mental and physical health conditions, with long waiting lists for support
• Discrimination during the hiring process due to perceived racial prejudice or stigma around mental health issues

We also held workshops with stakeholders representing population groups facing additional challenges. They highlighted key changes needed to make the labour market more inclusive:

• More integration between work, health and skills services to provide more holistic, longer-term support for those who need it
• Taking a person-centred approach, recognising the diverse and complex needs of individuals
• Wider advertisement that ensures people understand what support is available and how to access it

The final stage of this work will set out options for how Wales can make the most of the opportunity of devolution, with practical actions for government, employment support providers, and employers. Research findings and policy recommendations will be published in November 2025.

Data taken from the 2021 Census.

For this research, economic inactivity refers to adults (aged 16-64 years) who are listed as economically inactive through disability or long-term health condition, looking after home or family, or for ‘Other’ reasons. It does not include students or retired people.