North East unemployment edges down, economic inactivity up

North East unemployment has edged down again but the improvement has been more than wiped out by a rise in the number of people classed as economically inactive – not working or looking for work.

The combination of unemployment and inactivity means that a smaller proportion of people in the region aged 16 to 64 are working than at any time since 2015.

Another 11,000 people dropped out of the labour market altogether in the three-month period between December 2021 and February 2022, bringing the total to 417,000 or 25.7%. This was more than double the 5,000 who found work, bringing the unemployment total down to 67,000.

Unemployment in the North East has fallen by 0.1% in every three-month period since September-November 2021, when it was 5.7%, and now stands at 5.4%. But the economic inactivity rate is at its highest since March-May 2015, when it was the same as now, and has not been higher since March-May 2013 when it was 26.2%.  

The North East employment rate has been going almost steadily down since May 2020, when it was 74.1%, though there was a temporary, partial recovery in May 2021.

Unemployment in now the highest in the UK, economic inactivity is the highest apart from Northern Ireland and employment is the lowest, according to figures published today by the Office for National Statistics (ONS).

Nationally, the latest ONS figures show that UK unemployment fell by 0.2% to 3.8% in the December-February period while the inactivity rate rose by 0.2% to 21.4% and the employment rate was unchanged on 75.5%.

PARTNERSHIP

Helen Golightly, chief executive of the North East Local Enterprise Partnership, said: ‘There has been a recent small increase in the number of people working in the region, with about 2,300 more people in employment than in the previous quarter, and there was also a decrease of 4,900 in unemployment.

‘However, the working age employment rate has fallen slightly, suggesting that much of the employment increase was among workers aged 65 plus. 

‘The North East employment rate remains the lowest among the nine English regions, with the unemployment rate and working age economic inactivity rate both being the highest. The latter measures the number of people not in work or actively seeking employment.

‘And progress in the past year has not matched other areas of the country. As we recover from Covid-19, the North East is the only region with a significantly lower employment rate than a year earlier, and the largest increase in the economic inactivity rate over the period. 

‘Looking at local data for the last year, employment in the North East LEP area [which excludes Tees Valley] decreased more for women than men, and we have seen increases in economic inactivity across all working age groups in the North East. There has been a large growth in numbers citing looking after family or home as a reason for inactivity. 

‘However, there is an opportunity to do more to benefit the economy and boost employment, with employers continuing to report demand in the labour market and difficulties in recruitment. 

‘Energy prices, along with a range of other price rises, are going to increase costs for families and we urge government to focus investment into the North East to encourage more progress in the labour market.’

CHAMBER

Arlen Pettitt, knowledge development manager at the North East England Chamber of Commerce said: ‘The headline rate of unemployment may have fallen, however this isn’t the result of more people in work but rather more people drifting out of the labour market entirely, as seen in the rising economic inactivity figure.

‘What we have is an economic recovery which is stuttering. Just as the cost of living is starting to bite for individuals, so too is the cost of doing business for our region’s employers. Our latest economic survey told us costs are the biggest worry for businesses, with nine in ten North East firms citing inflation as a concern and the same number saying energy prices.

‘The Chancellor’s Spring Statement failed to address those concerns. It’s been two almost impossibly difficult years, and with more uncertainty ahead of us we need the government to face up to reality and take some tangible steps to support business recovery.,