Unemployment in the North East has fallen to another record low but there are growing concerns on the number of people in the region opting out of the labour market entirely.
New figures from the Office for National Statistics show the region’s unemployment rate fell to 4.2% in the three months to the end of September, lower than the previous record low of 4.4% recorded last month and close to the national average of 3.6%. The North East no longer has the highest unemployment rate in the UK, which is instead in the West Midlands.
But the positive news on unemployment - which was hailed on a visit to the North East last week by Bank of England governor Andrew Bailey - comes alongside growing worries about the number of people being able to work because of ill health or the cost of childcare.
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The monthly unemployment figures were released just hours before the North East LEP - the body tasked with developing the region’s economy - published its annual state-of-the-region report, Our Economy 2022. The report highlighted how targets to create 100,000 new jobs between 2014 and 2024 had been set back by the Covid pandemic but were starting to recover.
But it also raised concerns over the number of people being classed as ‘economically inactive’, which is currently more than a quarter of the region’s adult population, the highest level in England, Scotland and Wales.
The LEP’s report says: “The region has experienced a challenging conundrum of high demand for labour, high numbers of payrolled employees and high vacancy rates, whilst at the same time seeing both the employment rate and unemployment rate peak and then fall away with people, particularly older workers, leaving the labour force altogether. The causes of this are still being explored, but appear to be a combination of health challenges, including long Covid, and evidence of a trade-off for many between the income from work and the time required for caring.”
Elsewhere in the LEP report, figures showed big increases in costs for businesses in the North East while salaries have risen slower than the national average and well below the rising cost of food, energy and other costs. It said 88% of people in the region have seen cost of living increases, while more than half are spending less on essentials and almost a fifth have had to use credit or dip into savings as a result of the cost of living crisis.
Presenting the figures, the LEP’s director of strategy and policy Richard Baker said: “We’re now facing a significant economic shock, along with the rest of the country and the rest of the world. Supply chains are being disrupted by the war in Ukraine and that’s impacted particularly on energy and food supplies, with a wider knock-on across the economy.”
Responding to the unemployment figures, Callum George, policy adviser at the North East England Chamber of Commerce said: “In the North East, the unemployment rate has improved by 0.9% compared to April-June 2022. Additionally, the employment rate has improved by 0.3%. However, economic inactivity has worsened by 0.3%.
“With Prime Minister Sunak’s Government announcing their new fiscal plan in two days, it is crucial that those who are struggling to access the job market are accounted for. This means a commitment to training and education, as well as a focus on helping adults back into work who left the labour market during Covid.”
This morning’s figures come in a significant week for economic announcements. Tomorrow will see the latest inflation figures released while Chancellor Jeremy Hunt will make his autumn statement on Thursday.
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