Speaking to service users of the system, the report found that Jobcentres offer support on a conditional basis, threatening to remove financial support if set requirements aren't met.
This leads to people applying for jobs they are not suitable for, wasting both their and prospective employers' time.
Speaking to HR magazine, Melanie Wilkes, associate director at IPPR, said: "Employment support isn't working for employers. Instead of supporting the right people to apply for the right jobs, the Jobcentres' approach results in businesses having to spend time, money and resources on sifting through inappropriate applications.
"We know that a more targeted system which matches candidates skills and values with the right organisations for them, would work better for everyone."
IPPR made four recommendations for reform of Jobcentre employment services:
1. To professionalise the role of Jobcentre work coaches;
2. To exempt people with health conditions and single parents from sanctions;
3. To work in tandem with wider aims of the government’s industrial strategy, including working toward net zero goals; and
4. To devolve decisions on employment support and skills.
Henry Parkes, IPPR principal research fellow and co-author of the report, said as the UK continues to experience a skills shortage, these reforms are particularly urgent.
He said: “At a time when our whole economy is being held back by workforce challenges it’s more urgent than ever to ensure everyone can access genuine help finding the jobs that work for them and their wider circumstances.
“Rethinking the system of employment support, so that work coaches can focus on finding solutions that work for both employees and employers, should be the first step towards a new universal service that works better for everyone – and for the UK economy.”
IPPR's paper Working Together: towards a new public employment service can be read in full here.