Professor Graham Thrower examines alternative approaches to addressing skills and economic inactivity and highlights the importance of creating pathways to employment for those from marginalised and disadvantaged backgrounds.
The North East of England has long been known for its people – their resilience, creativity and sense of community. Yet despite these strengths, too many residents remain excluded from the prosperity that investment and regeneration promise. Economic growth has not translated into opportunity for all. High economic inactivity, skills mismatches and deep health inequalities continue to hold the region back.
Drawing on and extrapolating from recent research at the Institute for Economic and Social Inclusion (IESI) at the University of Sunderland and Kada Research, and from research and interviews conducted over the summer and autumn of 2025, I’ll try to tackle the challenge of inclusive pathways to employment head-on. Considering extensive data analysis, interviews, and national best practice, I’ll set out how regions like the North East can create real pathways to employment and equip workers with the skills demanded by an evolving and growing economy.
Why Workforce Skills Matter
Skills are the engine of economic growth. As the OECD notes, higher skill levels increase productivity, wages and life satisfaction. But they also drive inclusion: giving more people the means to participate in, and benefit from, a modern economy.
In the North East, this is particularly urgent. The region has numerous growth sectors such as advanced manufacturing, electric vehicles, green energy, life sciences and pharma, resilient communications and space, digital and creative industries, and most recently, AI and data centres. It is also experiencing significant inward capital investment in terms of its built environment, smart cities and urban regeneration.
However, despite this relatively positive economic backdrop, there remains a persistent disparity with the lived reality of many individuals and communities across the region. A disabling cocktail of acute inter-linked social and socio-economic challenges exists around child poverty, poor quality housing stock, educational attainment drop-offs at secondary level, profound issues of mental and physical health, higher than average levels of economic inactivity, a capacity-constrained third sector and issues of tension around social cohesion.
Additionally, and simultaneously a product and cause of these social issues, there are continued economic challenges in areas such as productivity, innovation, skills investment, entrepreneurship and R&D.
Addressing these challenges requires more than just training courses. It demands a coordinated system linking health, skills, business, and community support—a system that turns potential into participation.
Five Interlocking Challenges
In my view, there are five key overlapping barriers to a thriving, inclusive labour market.
1. Economic Inactivity
Long-term sickness, disability and mental-health conditions explain over a third of inactivity. Many people want to work but cannot navigate the complex web of benefits, transport and childcare. Some have lost confidence after years out of work; others are deterred by insecure, low-paid jobs that make leaving benefits risky.
I would argue that skills and health are inseparable. Effective interventions must provide wraparound support—coordinating pre- and post-employment services with mental-health provision, community outreach, and in-work flexibility.
Research from elsewhere, such as Barnsley’s Pathways to Work commission, shows what works: early intervention, holistic case management, and personal support for health conditions and caring responsibilities. Such programmes recognise that employment is not simply an economic outcome but part of a person’s wellbeing journey.
2. Young People and the NEET Challenge
The North East’s high NEET (Not in Education, Employment or Training) rate is a generational warning light. Many young people leave school lacking the confidence, networks, and awareness to move into work. Mental-health problems are a major barrier: 31% of NEETs cite poor mental health as a key obstacle.
Successful responses blend employer engagement with pastoral care. Schools and colleges need stronger links to local industries, even in early years education; young people need exposure to real workplaces and role models. Smaller firms must be meaningfully supported to take on first-time workers through bursaries for travel and equipment, mentoring, and “de-risking” recruitment of inexperienced applicants.
Early inspiration also matters. Primary-school STEM programmes like Little Inventors, where children design green solutions to real-world problems, help challenge gender stereotypes and sow the seeds of ambition.
3. Skills Mismatches
Half of North East workers are in jobs that don’t match their qualifications. A quarter are overqualified and another quarter are underqualified. Add to that 23% functional illiteracy and widespread digital exclusion, and the result is a system that uses its precious human capital inefficiently, that wastes talent and limits growth.
Employers report difficulty finding “work-ready” candidates with communication, teamwork and basic digital skills. At the same time, employment and skills opportunities are often not apparent to individuals. Many workers cannot see clear routes to progression.
Solutions to these issues include:
- Early careers awareness – connecting education to emerging sectors from school age. This needs to start before secondary education;
- Flexible, modular learning – to fit around work and caring duties, and other activities that relate to building emotional and social resilience;
- Income-maximisation advice – to reassure those fearful of losing benefits, and to help navigate an often opaque and intimidating state infrastructure;
- Targeted outreach to minoritised groups to ensure equitable access.
Additionally, supporting employers to develop strong and clear “skills ladders” within firms is essential, helping staff progress and allowing businesses to harness, retain and reward existing and developing capabilities and skills.
4. Sector-Specific Shortages
Several industries vital to regional growth are hampered by acute skills shortages (though skills deficits and mismatches are a challenge across virtually all sectors):
- Health and social care struggles to recruit and retain staff despite constant demand.
- Digital technology and advanced manufacturing face major technical skills gaps.
- Construction and green energy sectors are expanding, but lack qualified labour.
- Creative industries need both technical and entrepreneurial skills.
What is needed is to replicate and support a coordinated hyper-local third sector “no wrong front door” model – to enable multiple, accessible routes into sector-specific training. Schools, colleges and employers should co-design curricula so learning matches real jobs. Public campaigns can showcase opportunities in undervalued sectors and promote inclusion (e.g., women in engineering or older entrants into digital roles).
5. Structural Barriers
Beneath these immediate issues lie systemic weaknesses:
- Low R&D investment and limited high-value employment;
- An ageing workforce with many early retirees;
- Persistent social deprivation and health inequalities.
- High and spatially concentrated levels of economic inactivity.
Addressing these demands long-term alignment between economic, education and health policy – ensuring that skills development translates into higher productivity and better jobs.
Learning from Best Practice
Across the UK, innovative programmes are showing what inclusive employment support looks like. The examples below provide several transferable lessons:
- Local collaboration works. Initiatives such as the North East Automotive Alliance’s Inclusive Pilot in Advanced Manufacturing (IPAM) demonstrate how employers, colleges and councils can design shared training pipelines.
- Employers need confidence. Schemes that help businesses navigate support systems – like the Access to Work scheme for disabled employees – build trust and widen recruitment.
- Community connectors reach the unreachable. Training trusted people within community hubs as advisers bridges the gap between formal institutions and those with “small personal geographies” – residents reluctant or unable to travel beyond their immediate area.
- Holistic, person-centred support. Programmes integrating mental-health services, financial counselling, and career guidance outperform those focusing on skills alone.
- Evidence and evaluation are vital. Few initiatives track long-term outcomes or share learning regionally. Embedding evaluation from the start ensures public investment delivers measurable impact.
Towards a New Model of Workforce Skills Delivery
So how do we pull these inter-connected strands together? How do we address the social and the economic, answering the needs of the individual whilst also recognising the needs of business and the challenges they face?
I would argue that there are no single silver bullets here. If there were, we would have solved these issues decades ago. The challenge is to work across government departments, across areas of Local Authority service delivery, to work across administrative boundaries, and to recognise the need for investment today for socio-economic and societal returns that will only be recouped over decades. The latter is always a challenge given the exigencies of electoral cycles.
The above notwithstanding, I would propose the following six interconnected recommendations – an agenda for a more inclusive, productive North East.
1. Strategic Coordination
Stronger partnerships between the North East Combined Authority (North East CA), local authorities, education providers and sectoral bodies are essential. Fragmented funding and overlapping programmes must give way to a unified regional skills strategy guided by shared data and goals. Systems reform to create an integrated approach to health and employment is one of three priorities of the CA’s Economic Inactivity Trailblazer. Next year, the evaluation of the trailblazer will show how effective this has been at delivering outcomes for people.
2. Employer Engagement
Encourage businesses to invest in training by demonstrating clear returns in productivity and retention. Incentives could include matched funding (from the public sector), in-kind support or recognition schemes. Crucially, skills investment must cover both high-growth and foundational sectors such as retail, care and hospitality – the entry points for many workers.
In addition to productivity and retention, there is also a clear business logic in ensuring your workforce better reflects the communities in which a company is based or the customer base that it serves. We cannot afford to waste our human capital. North East CA’s New Deal for North East Workers calls itself a ‘human capital strategy’ for a reason. Part of CA’s Economic Inactivity Trailblazer focuses on inclusive workplaces and recruitment.
3. Inclusive and Flexible Skills Provision
Tailor training to the realities of diverse learners. This means:
- Digital and part-time delivery;
- Modular qualifications are stackable over time;
- Local training sites are brought to where people are, namely, community venues;
- Practical learning linked to live projects.
Such flexibility helps economically inactive people and NEETs re-enter education at their own pace.
4. Alignment and Progression Pathways
Training should map directly to employer demand, with transparent routes from entry to advanced roles. Guaranteed interviews or placements at the end of a course greatly boost participation. Employers and providers must jointly design “skills ladders” within firms and sectors.
5. Monitoring, Evaluation and Learning
Each programme should include robust evaluation frameworks measuring both economic and social outcomes – confidence, wellbeing, progression. Sharing data region-wide will facilitate continuous improvement and scalability.
6. Future Research and Community Mapping
To target resources effectively, the region needs fine-grained mapping of economically inactive populations: where they live, which local organisations engage them, and how outreach venues (libraries, community centres, faith spaces) can host training. We are already working with Local Authorities on exactly this type of mapping as part of the region’s Economic Inactivity Trailblazer programme.
Future studies will also track the interaction between employment and health—i.e. how good work supports wellbeing and how health interventions facilitate employability.
The Bigger Picture: From Fragmentation to Collaboration
Behind every statistic lies a person navigating complex systems. Too often, the UK’s skills ecosystem – split between government departments, education levels, administrative boundaries, social demographics and funding pots – leaves individuals lost in the maze. The North East now has the opportunity, through devolution and new national initiatives like Skills England, to build a coherent alternative.
Skills England, launched in 2024, aims to create “better skills for better jobs” by aligning national priorities with local delivery. For the North East, that means using devolved adult education budgets strategically to meet the region’s five missions:
- A growing and vibrant economy for all
- A home for the green-energy revolution
- A welcoming hub for global trade
- A place of real opportunity
- A region we are proud to call home
These ambitions can only be achieved if people are placed at the centre of growth – supported, skilled, and empowered to contribute.
Breaking the Cycle of Inequality
The social dimension of skills policy is profound. When one adult in a household moves into fair work, the likelihood of children growing up in poverty drops sharply. Employment support is therefore not just an economic lever and socially just, but it is also a mechanism of generational change.
By focusing on inclusion – youth, disabled people, older workers, minoritised communities – the North East can build a labour market that reflects its values of solidarity and fairness. Such a future would realise the promise of the North East Local Growth Plan: “A place where everyone thrives”.
Conclusion: Skills as a Shared Mission
The message of this research is clear: it is not enough for the North East to just have great people – it must become great with people.
Economic progress cannot rely solely on attracting investment or building physical infrastructure; it depends on human capability. That capability grows when training is relevant, accessible and inclusive; when employers see skills as a long-term investment; and when communities trust that opportunities are genuinely for them.
The region already possesses the foundations: devolved powers, engaged councils, active universities, innovative employers, and a vibrant voluntary sector. The task now is to connect these assets through shared purpose.
By turning insights into action – aligning education, health and industry – the North East can pioneer a new model of workforce development: one that closes skills gaps, lifts productivity, and delivers social justice. Working across Combined Authorities and the devolved nations, best practice can be shared. There is a critical role here for Skills England working closely with the devolved governments as a knowledge convenor and disseminator.
By learning from, developing and applying best practice, the North East will not just strengthen its own economy. The region will benefit from the application of what works from the CA’s Trailblazer, North East and North Cumbria Integrated Care Board (ICB) Health and Growth Accelerator and the North East Mayor’s child poverty reduction unit.
These interventions have the potential to offer the rest of the UK a blueprint for inclusive, sustainable growth. Proof that when people and place work together, everyone wins.
This blog was written by Professor Graham Thrower, Head of The Institute for Economic and Social Inclusion at the University of Sunderland and Fellow at the LPIP Hub, University of Birmingham.
Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI or the University of Birmingham.
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