Policy leaders have warned of difficult times ahead for North East businesses and communities, following the release of latest unemployment and PAYE statistics.
Last figures from the ONS (Office for National Statistics) show that between April and June the region’s average employment rate for ages 16-64 was 71.4%, compared to the UK rate of 75.5%. The North East unemployment rate for people aged 16-plus was 5.1% – unchanged from last month’s figure and up on the UK average of 3.8%.
The average economic inactivity rate for those aged 16 to 64 was 24.9% for the North East, above the national figure of 21.4% and a gap which North East policy bosses say must be closed by the next Government. Helen Golightly, chief executive of the North East LEP said the data show little change from the position last month, aside from a small increase in the working age employment rate over the last quarter and a small decline in total employment for all age groups.
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More working age people have joined the labour force and are looking for work, which has led to a small rise in the unemployment rate, alongside a slightly larger decrease in the economic inactivity rate.
Ms Golightly also referenced the latest PAYE data, which highlighted how workers saw their pay lag behind inflation at record levels over the past quarter. The ONS said regular pay, excluding bonuses, grew by 4.7% over the three months to June, but this comes after CPI inflation hit a new 40-year record of 9.4% in June – ahead of an expected 11% later this year.
This resulted in a 4.1% drop in regular pay for employees once CPI inflation is taken into account, representing the biggest slump since records began in 2001.
Ms Golightly said: “Nationally, the labour market appears to be slowing. There is some evidence of a decline in the high rate of vacancies in the economy, with a particular impact on recruitment amongst small businesses employing fewer than 50 people.
“But the main focus at the moment will be on standards of living. PAYE data which has been released shows that the region’s median employee pay continues to increase at a similar rate to nationally, at a time when costs of living in areas like energy and food are increasing, leading to a real terms decrease in regular pay of about 3%.
“We can surmise that the relatively static situation in the labour force is caused by ongoing uncertainty in the economy, with employers and employees waiting to see how the economic situation changes and how public policy develops in response. Without intervention, we can expect a difficult economic situation for local communities and businesses over the coming months with increasing prices impacting on costs, investment and employment.”
Marianne O’Sullivan policy manager at the North East England Chamber of Commerce said: “Today’s employment figures show that there are still gaps between the North East and the rest of the UK.
“The North East’s unemployment rate for those aged 16 plus is 1.3% higher than the national average, economic inactivity for those aged 16-64 is 3.5% higher and the employment rate for those aged 16-64 is 4.1% lower.
“Year on year in the North East there has been a 0.6% increase in economic inactivity a 0.7% reduction in the unemployment and employment rate is unchanged.
“The small reduction in unemployment is welcome but we need to reduce the levels of economic inactivity in the region which will also help to tackle some of the labour shortages businesses are facing. Closing the gap to the national averages will be one of the key measures of success for the next Government.”
Reacting to the ONS Labour Market statistics released, BCC head of people policy, Jane Gratton, added: “The labour market remains incredibly tight adding to the growing list of concerns businesses are facing. This is a ticking timebomb for firms up and down the country.
“Today’s figures show little improvement for employers over the last quarter. Despite the small increase in employment levels, the number of job vacancies in the economy remains around the highest on record. Competition for skills and labour continues to drive up wage costs.”
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