North East 'economically inactivity' rate soars as thousands unable to work

People going into a Job Centre
-Credit: (Image: Getty Images)

The North East has the lowest proportion of people in work after the number classed as “economically inactive” grew by almost 70,000 in the last year.

New official figures show that the number of people deemed economically inactive - defined as those who have not been seeking work within the last four weeks or are unable to start work within the next fortnight - now stands at 27.4% of the adult population. The number of people in that category, which tends to include those suffering from long-term ill health as well as those who have opted to retire early, has risen from 386,000 last year to 455,000 in the latest figures from the Office for National Statistics.

The North East has significantly the highest rate of economic inactivity in England, meaning the region has the country’s lowest rate of employment. The current rates of economic inactivity have not been seen in the region since the financial crash of 2008-9.

Read more: 118,000 children growing up in poverty in North East Keep up to date with all the latest breaking news and top stories from the North East with our free newsletter

Business groups say the figures show that historic patterns of ill health in the North East are holding back companies as they try to grow the region’s economy, and have called on the next Government to act to help more people get back into work.

Marianne O’Sullivan, policy manager at the North East Chamber of Commerce, said: “ONS employment figures released today suggest a worsening in labour market conditions. The figures show the North East has the highest economic inactivity rate in England, demonstrating a widening of regional inequalities.

“We have seen volatility within the employment figures as the labour market survey is reweighted. The ONS continues to use experimental data following issues with data collection earlier this year, so we will need to see if this is a long-term trend.

“Breaking down barriers to work needs to be a key priority for the major parties ahead of the general election, unlocking the potential of our people and their talent. We have many growing sectors in the North East such as in digital, advanced manufacturing and the green sector. We need to ensure that we have the skills provision in place to ensure as many people as possible have the chance to take advantage of this, and secure rewarding, good work.

“We know that ill health is a key reason behind economic inactivity. Occupational health is a key element to getting people back into work and supporting people to remain within the workforce.”

Matthew Percival, future of work and skills director at the CBI, said: “While the labour market continues to slowly cool, it remains very difficult for companies to hire the people they need to grow and pay continues to rise significantly faster than inflation, pushing up prices.

Labour shortages remain one of the biggest challenges facing businesses. A credible plan to tackle shortages should involve pulling a range of policy levers such as removing barriers to work, supporting investments in technology, building a skills system that supports lifelong learning, and a new approach to immigration.”

Nationally, the UK’s unemployment rate rose unexpectedly to its highest rate for more than two years to stand at 4.4% in the three months to April. There was also another increase in the UK’s inactivity rate, with 22.3% of those aged between 16 and 64 not actively looking for work.

But the figures showed regular earnings growth remained unchanged at 6% in the three months to April and continued to outstrip price rises - up 2.9% when taking Consumer Prices Index (CPI) inflation into account.

The ONS said: “This month’s figures continue to show signs that the labour market may be cooling, with the number of vacancies still falling and unemployment rising, though earnings growth remains relatively strong.”