Figures out last week showed that the headline unemployment in the North East had fallen for the third month in a row, though it remains the highest in the 海角视频.
But those figures from the Office for National Statistics also pointed to a curious feature of the current economy. For while unemployment has fallen by 6,800 in the North East over the last year, so has the employment rate (declining by 20,000 over the same period).
The explanation for both employment and unemployment rising at the same time can be explained by an increase of 36,000 people making themselves ‘economically inactive’, meaning they are of working age but are not currently seeking employment. The region’s rate of economic inactivity has passed 25% of the working age population, and is the second highest in the 海角视频 (behind only Northern Ireland).
Read more : go here for more North East business news
Becoming economically inactive can be due to a number of factors, such as taking early retirement, looking after a family or home, or being long-term sick. It is likely that the pandemic, and people suffering from ‘long Covid’, may have impacted on the figures.
Nationally, the number of economically inactive working-age people in the 海角视频 stood at 8.9m in the three months to February, an increase of 76,000 on the previous quarter and a jump of nearly half a million on the three months to February 2020.
Rates of economic inactivity among older workers has climbed to its highest level for six years. There are now 302,000 more economically inactive 50 to 64-year-olds than before the pandemic, suggesting an increasing number of older workers are choosing to retire early. This represents a sharp reversal of the long-term trend before Covid-19, which had seen a growing proportion of people in this age group choosing to remain in employment or actively look for work.
The change has also had an impact on the balance of age groups within the labour market, with a recent trend of older people staying in work going into reverse.
Most Read
But there are also early signs that the level of economic inactivity might be starting to rise among 35 to 49-year-olds. The rate had dropped to a record low of 11.7% in the quarter to August 2021, but has since climbed to 12.4%.
Darren Morgan, ONS director of economic statistics, said: “While unemployment has fallen again, we are still seeing rising numbers of people disengaging from the labour market, and as they aren’t working or looking for work, are not counted as unemployed.”
After this week’s figures were released, Matthew Taylor, chief executive of the NHS Confederation, outlined why people leaving the world of work could become a significant problem for the country.
He said: “There is starting to be a greater awareness of the relationship between health and prosperity. For example, differences in health help to explain productivity gaps between regions and places. But now we have a more vivid example.
“A major problem for many parts of the economy is labour shortages. The number of people participating in the labour force has fallen substantially away from the trend. Among the reasons for this is ill health (those who are ill and those caring for them).
“The numbers not working due to illness include hundreds of thousands with forms of Long Covid and many others waiting for treatment including operations. Falling participation drives labour shortages which cause problems for employers and can stoke inflation.
“In many sectors employers are having to increase wages to recruit but this option is not generally available for publicly funded jobs (especially given the failure of the Chancellor’s spring statement to adjust public service spending to reflect cost of living pressures).”
Don’t miss
In the North East, the declining workforce has been noted by Helen Golightly, chief executive of the region’s local enterprise partnership.
She said: “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 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.”