North East has lowest number of people in work, new figures show

Fewer people are in work in the North East despite a fall in the official rate of unemployment, new figures reveal.

Monthly data from the Office for National Statistics shows that the North East’s unemployment rate fell slightly to 5.4%, the second month in a row that the rate has fallen. But there was a big rise in the number of people classed as ‘economically inactive’, with more than a quarter (26.4%) of the North East workforce not available for work.

People classed as economically inactive include those who have retired early or are choosing not to work due to caring responsibilities. But it also includes people with long-term sickness, and the North East now has the highest rate of economic inactivity in the country.

The UK’s official statistics agency has warned changes in the way it measures the country’s labour force has meant current figures have been volatile and have been treated with some caution in recent months. But it believes the figures are now reasonably robust, and point to more than 450,000 people in the region being economically inactive, along with 66,000 unemployed.

Nationally, the rate of UK unemployment remained unchanged at 4.3% in the three months to October, while average regular earnings growth rose to 5.2% in the three months to October and was 3% higher after taking inflation into account.

Work and Pensions Secretary Liz Kendall said: “Today’s figures are a stark reminder of the work that needs to be done. To get Britain growing again, we need to get Britain working again – so people have good jobs which pay decent wages and offer the chance to progress.”

There are growing fears over an impact on hiring and jobs after the Budget announced steep increases in employers’ national insurance contributions and a minimum wage rise next year.

A separate survey yesterday suggested that private sector employment fell at the fastest rate in nearly four years as firms continued reacting to the autumn Budget. The S&P Global flash UK composite purchasing managers’ index (PMI) reported a reading of 50.5 for December, unchanged on November’s figure but with companies seeing a “marked pullback in hiring”, according to the research.

Jane Gratton, deputy director public policy at the British Chambers of Commerce, said: “With firms reconsidering their recruitment plans due to rising employment costs, there is a risk this could impact the labour market in the months ahead. But it is crucial the Government continues to take action to tackle the skills crisis, boost workforce health and ease economic inactivity.”