Sunday, July 3, 2022

New pathways needed for younger people to replace retiring workers as record-low regional unemployment rate disguises key issues

The East Midlands’ unemployment rate remains the second-lowest in the country after falling for the fifth consecutive month.

It was 2.7% for the period between January and March 2022 – a full percentage point below the national average, which was the lowest since 1974, and only higher than Northern Ireland (2.3%), according to the Office for National Statistics’ (ONS) regional labour market figures.

However, the region’s economic inactivity rate – which measures the proportion of 16 to 64-year-olds who have exited the labour market for reasons such as retirement, caring duties, long-term ill health or studying – continues to climb to 21.9%, up by 0.8 percentage points from a year earlier and above the 21.4% national average.

Despite the low unemployment rate, the ONS said the number of people in jobs was still below pre-COVID levels, while regular pay fell by 1.2% when adjusted for the impact of inflation, which hit a 30-year high at 7% in March.

East Midlands Chamber Chief Executive Scott Knowles said: “At first glance, the unemployment rate falling for the fifth month in succession to hit yet another record low is hugely positive for the region’s labour force. It is largely testament to the success of our businesses in steering a strong rebound for our local economy as they got back to what they do best once COVID-19 restrictions were repealed.

“However, these figures disguise a historic hiring crunch facing many of our companies. The Chamber’s latest Quarterly Economic Survey showed that while 63% of East Midlands businesses attempted to recruit in the first quarter of 2022, four in five (80%) of this cohort encountered problems with filling vacancies.

“In an increasingly tight labour market, competition for skills is ramping up wage costs, leaving many firms unable to recruit the people they need given the other increasing overheads they face, such as energy and raw materials.

“Recent increases in economic inactivity have been driven by those aged 50 to 64 leaving the workforce, according to the ONS, so it’s clear we need to find pathways to get younger people into industries including manufacturing, construction and engineering, which are among those struggling the most in recruitment.

“With the economic recovery now on a knife-edge – as illustrated by national GDP shrinking by 0.1% in March – it’s imperative the Government does more to help people access retraining opportunities for in-demand jobs. Introducing a new skills tax credit would also incentivise employers to invest in training so we can grow our next generation of skilled workers.”

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