The report considers the impact of the COVID-19 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.

The Committee 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, require additional support to implement flexible working and improve reasonable adjustment policies.

The report expresses 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.

Convener of the Scottish Parliament’s COVID-19 Recovery Committee, Siobhian Brown MSP, 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.”

She concluded: “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.”