Increased flexible working would tackle staff shortages that threaten economic growth, experts have said.

More of the working-age population would take up work or stay in jobs if they were offered greater flexibility on where and how they worked, analysts said. Central bankers have said a labour supply problem risks cutting the UK’s potential for growth.

Flexible working has become increasingly popular since Covid-19 lockdowns forced people to work from home. Amid staff shortages and record vacancies last year, many companies expanded their flexible working offer to attract recruits.

However, most workers still have no option to work in a hybrid manner, figures published by the Office for National Statistics (ONS) show. About half a million workers left their jobs during the pandemic, with no plans to return, pushing up the rate of economic inactivity, which measures the share of working-age people who are neither working nor available for work.

Some of the rise was caused by the ageing of the population, which meant a greater share of workers reaching retirement age, but the trend was driven mainly by workers aged 50 to 64 who retired early or had to leave their jobs because of long-term sickness.

Increasing flexibility improves participation in the workforce not only among older workers but also people with health conditions, students and parents, said Tony Wilson, director of the Institute for Employment Studies. For some companies, there are barriers to offering greater flexibility. “There are a lot of industries, particularly industries that have been built on a ready supply of labour and having one-way flexibility, where the employer can set the terms,” Wilson said. “Many of them are choosing to reduce their output because they can’t find the staff.”

Jonathan Boys, of the Chartered Institute of Personnel and Development, an association for human resources professionals, said older staff were “much more likely to work from home, or be self-employed which I think is a way to appropriate some of the benefits of flexibility that you can’t get through employment”.

There was a rise in older people returning to work at the end of last year but it was too early to say there had been a reversal of the trend, according to analysis of ONS data published last week by the Institute for Fiscal Studies.