Focus turns to staff and skills shortages as unemployment falls

The North East unemployment rate continued to fall over the most recent three-month period but remains the highest in the UK outside London, according to figures published today by the Office for National Statistics (ONS).

The region’s jobless rate was 5.2% in the June-August period, which was down 0.6% on March-May compared with a drop of 0.5% to 4.5% for England as a whole. The London rate fell by 0.8% to 5.8%.

However, over the same two quarters the economic inactivity rate in the North East rose by 0.8% to 24.5%, the highest in the UK apart from Northern Ireland, while the employment rate fell 0.6% to 71.5%, again the lowest apart from Northern Ireland, while the rate for England rose by 0.5% to 75.6%.

Viewed over the past year, the North East has enjoyed the UK’s largest fall in unemployment of 1.3% but also experienced the second largest increase in the economic inactivity rate of 1.4%, just ahead of the North West

As the Covid-19 furlough scheme was coming to an end, the regional picture was therefore one of unemployment falling but more people leaving or failing to enter the labour market. The overall result was that the number of people in employment was 1,196,000, the lowest since September-November 2016.

At the same time the focus of concern is switching to staff and skills shortages. A survey by the North East England Chamber of Commerce and Durham University Business School published today shows that 57% of businesses in the region are more worried than three months ago about staff shortages.

Niamh Corcoran policy adviser at the Chamber, said: ‘While unemployment has decreased, employment levels are recovering at a slower pace, having fallen by 2.1% over the year. In part, this may be explained by a decline in migration and a decline in older women, men in their 50s, and students entering the workforce – partly due to ill health.

‘There is a risk that acute staff and skills shortages will stall the region’s economic recovery. To support businesses in finding the skilled workers they need, government needs to add jobs to the Shortage Occupations List and create temporary migration routes for workers from overseas. 

‘A significant effort is also needed to improve the quality and quantity of the domestic labour force. Government should tackle the barriers to training and employment that many face, such as ill-health or caring responsibilities. In addition, targeted employment support is needed for the long-term unemployed, as well as individuals who are frequently left out of the labour market, such as those who are disabled or older. 

‘To ensure the workforce can meet future business skills needs, companies must invest now in employee skills and work more closely with education providers to develop a strong local talent pipeline.’