The North East’s unemployment rate is more than three times worse than official figures suggest, new research claims.
A report from Centre for Cities reveals that there are more than 185,000 people across the region who are excluded from the Government’s joblessness statistics because they are classed as ‘economically inactive’. The Cities Outlook assessment lists the “hidden” unemployment rate in the North East in 2022 as in fact being 18%, compared to the 5.5% jobseeker rate, because the official figure only includes those who are actively looking for jobs – with the research institute warning that an “inactivity crisis is deepening the North-South divide”.
Under this analysis, nine of the 10 urban areas with the highest unemployment rate are in the North of England – with Newcastle ninth, Sunderland third, and Middlesbrough second. Of the ten urban areas with the lowest hidden unemployment rates, eight are in the South.
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Centre for Cities said that there was a “clear” North-South divide in the number of people out of work due to long term sickness, but also a “long-term jobs shortage problem” in the North and in Wales. Centre for Cities chief executive Andrew Carter said: “Since the pandemic we have seen lots of headlines alluding to record-low numbers of job seekers but Cities Outlook shows there is actually a jobs shortage, with a significant North-South divide in involuntary inactivity rates.
“With the UK now likely to enter a recession, the Government must address its insufficient action on levelling up so far and act swiftly to create more opportunities that get people back into the North’s labour force. This will require setting out and implementing an agenda that delivers much-needed investments in skills and public services, while supporting job creation in struggling places.”
Centre for Cities estimates that there are around 185,500 people in the North East who are involuntarily economically inactive – such as those who have left the labour market and stopped looking for jobs because they have been discouraged from doing so, believe there are no good jobs available, or cannot work due to health issues. The number does not include students, retirees, or people looking after family.
The hidden unemployment rates in the Cities Outlook report are 18% for Newcastle, 19.9% for Sunderland, and 20.2% for Middlesbrough – compared to 8.2% in Reading, which is the best-performing of the 58 towns and cities studied. Alex Hay, Newcastle City Council’s cabinet member responsible for employment, said the research showed a “massive structural imbalance between the North and the South”.
He added that initiatives including a £60m-per-year adult education budget under the proposed North East devolution deal, which it is hoped can create 24,000 new jobs, would “undoubtedly help, they are not enough on their own to tackle the problem and Government help is what is really needed here”. The Labour councillor said: “The North-East has had the highest unemployment rates in the country for far too long.
"If Government were serious about levelling up, we would have seen significant sums of investment into the region to create employment and training opportunities but sadly did not. We urgently need this investment if we are to redress the unfairness and imbalance in our economy that is holding back UK Plc.”
The city council’s new economy, jobs, and skills scrutiny committee last week discussed factors increasing economic inactivity in the over 50s – including physical and mental health, mismatches between skills and vacancies, and unconscious bias by employers.
Its chair, Lib Dem councillor Greg Stone, said: "The Centre for Cities study rightly draws attention to the importance of addressing hidden unemployment in cities in the North, and it is concerning to see Newcastle's high ranking in this table. It is generally agreed that the jobseeker claimant rate of unemployment does not give a true picture of economic inactivity and can hide particular problems amongst some groups and age ranges.”
A Government spokesperson said:
“We recognise one of our biggest challenges is how to support people who are economically inactive which is why we are working on measures to increase workforce participation. There are a record number of vacancies across the UK and our network of jobcentres work daily to help match jobseekers with these roles, tailoring support to the needs of the local jobs market.
“We are committed to spreading opportunity across the whole of the UK, including the North of England. In the last five years investment into the Northern Powerhouse has created 50,000 jobs and over 60 per cent of the growth in employment since 2010 has been outside London and the South East.”
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