A new report from Manchester-based Co-op Group and cross-party think tank Demos has argued that the UK economy is missing out on £19 billion in GDP growth every year due to a “systemic failure to promote greater social mobility in the workplace.”

The report called the The Opportunity Effect says greater social mobility could generate £6.8 billion in yearly tax revenues for the UK Government from additional economic activity – enough to pay for over 170,000 teachers or fund 884,000 school places.

Using regression data analysis, the report identifies the potential estimated benefits are comparable to adding 540,000 new jobs to the economy or increasing private sector GDP by 1.5% – equivalent to adding a city the size of Glasgow to the economy.

The report comes as Co-op calls on the UK Government to accelerate its commitment to make socioeconomic background the tenth protected characteristic under the 2010 Equality Act.

The report also finds that if employers were to take up five strategies that support greater social mobility, this could equate to a £1.8 billion rise in private sector business profits.

Demos’s report surveyed 500 senior business leaders across different sectors on their social mobility strategies. It finds that 76% felt that promoting social mobility would help attract and retain staff, while 71% believed it would help achieve business results.

Almost two-thirds (64%) say they were committed to at least five strategies that targeted increasing levels of social mobility.

The report makes a series of recommendations to the Government and businesses to promote social mobility and improve how the private and public sector work together. These include:

• Give Skills England a statutory responsibility to increase social mobility
• Create a government-backed ‘Better Opportunities Fund’ to co-invest in social mobility projects in partnership with the private sector
• Consult large employers on increasing minimum training and skills expenditure, to meet the EU average of £3,000 per employee
• Introduce a lower rate of business rates for social enterprises and cooperatives to boost social mobility
• Ensure social mobility is factored into public sector procurement
• Consult on expanding pay gap reporting to socioeconomic backgrounds – Co-op, which became the first retailer to publish a socioeconomic pay gap report earlier this year, urges other businesses to do the same
• Encourage businesses to ask job applicants to voluntarily share socioeconomic information
• Create a ‘Social Mobility Data Lab’, bringing public and private organisations together

The report also comes as a Co-op survey of 2,000 UK adults finds that 29% are more likely to purchase from a business promoting social mobility. The figure was higher amongst young consumers aged between 18-34, at over 40%.

Co-op CEO Shirine Khoury-Haq said:“This report marks an important moment in the UK’s productivity debate and puts social mobility at the heart of that discussion. It shows that breaking down barriers to opportunity can be a much-needed boost for the UK’s economy and for business performance. The benefits are too great an economic prospect to ignore.

“We have seen that countries with greater levels of social mobility are much better at promoting job matching success and greater productivity. These are systemic challenges for the UK which this Labour government – the most working-class Cabinet in history – has correctly identified in its pledge to grow the economy****. But it will require bold action to deliver and we need incentives for business to make changes if we are going to harness the true economic potential of enhancing social mobility.

“At Co-op, we’ve made social mobility a core part of our strategy, becoming the first retailer to publish a socioeconomic pay gap report. Being able to support colleagues when they need it, and in particular women, helps retain valuable talent and makes good business sense. But we cannot do it alone. We ask that businesses, the public sector and government work collaboratively to embed support for greater social mobility within our working cultures. It cannot be right that our life chances are often defined by our backgrounds, and this is an open goal of an opportunity on which we must take action.”

Billy Huband-Thompson, Lead Researcher at Demos, said: “This report clearly demonstrates that putting our shared interests at the heart of decision making has benefits for individuals, but also our economy. Tackling barriers to employment and career progressions are a key part of enabling people to have access to good, meaningful work. We hope the publication of this report will encourage greater collaboration between the public and private sector so we can collectively take the opportunity that waits before us.”