North East Labour Market Subdued But Stable Thanks To Furlough

The North East saw the UK’s second largest quarterly drop in unemployment in the November 2020-February 2021 period, closing the gap on the national average. But it still has the second highest jobless rate, after London. 

Unemployment In the North East, including Tees Valley, was 5.7% in November 2020-February 2021 compared with 6.2% in October 2020-January 2021, a fall of 0.5%. The UK average was 4.9% compared with 5.0% a month earlier while London was unchanged on the highest rate of 7.2%. 

The Office for National Statistics, which issued the figures today, said; ‘All regions saw an increase in the unemployment rate compared with the same period last year, with London seeing the largest, with an increase of 2.7% and the North East with the smallest increase of 0.1%’. 

Richard Baker, Strategy and Policy Director at the North East Local Enterprise Partnership (NELEP), said: ‘The headline North East regional data released today shows that the labour market was still subdued in the quarter to February 2021. There has, however, been a welcome improvement with employment increasing by 10,500 and unemployment falling by 8,700.

‘The North East was one of only three English regions to experience a quarterly increase in employment, but there remains a long way to go to recover the economy’.

Problems

In spite of the encouraging signs, the North East labour market continues to face severe problems. As well as having the second highest unemployment rate, the region has the second lowest working age employment rate of 71.9%, compared to the UK average of 75.1% and behind only Northern Ireland. The North East also has the second highest proportion of working age people who are economically inactive (23.7%), compared with 20.9% in the UK and ahead of only Northern Ireland. About 28,000 workers in the region have been made redundant during the last year. 

Mr Baker added: “The furlough scheme continues to be an important aspect of the Covid response. Furloughed workers are classified as employed in the official statistics so the extent to which their jobs continue after furlough will have a significant impact on employment and unemployment rates over the next few months. Around 150,000 workers in the North East region were furloughed at the end of February. 

‘The latest job seekers claimant count highlights large variations in unemployment across the North East LEP area. More than 30 wards, spread across all seven local authorities, have a claimant count rate of over 10%, while a similar number have rates of less than a third of that. This count also highlighted that one in five claimants in the North East LEP area were aged under 25.’ 

Chamber

Niamh Corcoran, policy adviser at the North East England Chamber of Commerce said: ‘With the furlough scheme successfully protecting jobs, it is distorting the true picture. It is likely that the full extent of the pandemic’s impact on the regional labour market will only be clear once the scheme is wound down. It is at that point that government will need to act quickly to mitigate spikes in regional unemployment. 

‘Worryingly, today’s national data exposes the significant impact of the pandemic on the employment prospects of young people. In the UK, more than half of those losing their jobs over the last year were below the age of 25, and 78% were under 35. With young people bearing the brunt of the crisis, the government should urgently extend the Kickstart Scheme and strengthen the apprenticeships system to increase the opportunities for young people.’