Following the pandemic, long-term illness has left hundreds of thousands of people unable to work, with the board set to craft solutions for those affected by both physical and mental health issues. The ultimate goal is to revitalise economic activity and return employment rates to pre-pandemic standards.

Chaired by Professor Paul Gregg, the board brings together experts in business, industrial relations, and academia to explore and implement effective strategies for re-engaging the workforce.

"Having studied the UK's labour market across several decades, it is clear that the current labour market faces a deep-seated set of challenges," said Paul Gregg, Chair of the Labour Market Advisory Board.

"We have seen a sharp increase in economic inactivity and long-term sickness, most notably in our young people post-pandemic. Further, real wage growth has been heavily supressed for 15 years hitting living standards and government tax revenues. Reversing these trends will be key to ensuring the long-term prosperity of the UK's labour market."

"I look forward to working with members of the board and the Secretary of State to support her vision for growth and examining positive solutions to address inactivity and harness the true potential of the UK's labour market."

The UK is the only G7 country that has failed to return to pre-pandemic employment and inactivity rates, and the Board has been tasked with reaching 80 per cent employment rate.

Derek Mackenzie, CEO of Investigo, commented: "The launch of the Labour Market Advisory Board is a timely and crucial step in addressing the growing issue of economic inactivity in the UK following the pandemic. As businesses face these challenges, it's essential they invest in their workforce to foster skills development to help attract and retain talent in a difficult market."

"When looking at ways to make a business more attractive to candidates, boardrooms should review their flexible work policies, provide training and career mentoring for staff development, and look to grow an inclusive and supportive culture."

Work and Pensions Secretary, Liz Kendall MP, is expected to work closely with the board on plans to devolve power to local areas to create bespoke work, health, and skills plans at a local level. The plan will be formally revealed in a whitepaper in the Autumn.

Part of that plan will include a new youth guarantee for 18-21-year-olds, and merging job centres with the National Careers service.