Since the pandemic there has been a big rise in the number classed as “economically inactive”, that is people who are not looking for jobs and not available for work.
Mr Ashworth warned of a “monumental waste of the talents of the British people,” with 2.5 million people out of work because of long-term ill-health.
In the address to the Centre for Social Justice, a think tank founded by former Tory leader Sir Iain Duncan Smith, he said “hundreds of thousands” could be helped back into work with better support.
He accused the Conservatives of “writing people off” – and argued that better help for jobseekers is now “urgent”.
He pledged that if it wins power at the next election, Labour would make it easier for those on sickness benefits to restart their payments if they take a job that doesn’t work out.
Currently, many such claimants have to repeat the work capability assessment they initially took to determine what benefits they are eligible for.
Mr Ashworth argued this acts as a disincentive to taking a job. He said a Labour government would instead let them return to claiming benefits within a year without a re-assessment.
Mr Ashworth also promised local councils control over a proportion of the skills budget currently spent by central government, to help ensure job training is better tailored to local areas.
He said his party would introduce greater flexibility to the government grants available to people with health conditions or disabilities to help them stay in work.
This, he said, would include allowing “in-principle” decisions to applicants so that employers have more certainty about what help is available.
During the event, Mr Ashworth was asked if his party would stick by its 2019 manifesto pledge to replace the Universal Credit benefits system.
The shadow minister said Labour wanted to “fundamentally reform” the system and would consult on ways to simplifying the process.
Responding to a preview of the speech, a spokesperson for the government said it was investing an extra £22m in employment support for the over 50s.
They added that the Department for Work and Pensions was reviewing workforce participation to see what action could be taken to cut economic inactivity.
