15 Nov 2022

Autumn Statement must encourage business investment in skills as East Midlands unemployment rate rises, says Chamber

The proportion of people out of work in the East Midlands has risen for the third month in a row.

The region’s unemployment rate, which hit a record low of 2.4% in the period from April to June this year, has now reached 3.5% for July to September, according to the latest regional labour market data from the Office for National Statistics.

It is just under the UK average of 3.6%, having been 1.4 percentage points below three months ago.

Meanwhile, the region’s economic inactivity rate – which measures the number of working-age people who have dropped out of the labour market for reasons such as retirement, caring duties, long-term ill health or studying – remains at a record high of 22.6%.

Rising economic inactivity rate and unemployment a concern

East Midlands Chamber chief executive Scott Knowles said: “It always felt like the historic low levels of unemployment that we’ve seen throughout this year were unsustainable given the huge pressures facing businesses.

“The rising costs for overheads like energy and raw materials has been well documented, but human resource has also become a lot more expensive and, for many, remains elusive.

“Our research shows about four in 10 East Midlands firms have been at full operating capacity over the past half a year and while two-thirds have attempted to grow via recruitment, at least four in five of this cohort have struggled to fill roles.

“In our latest Quarterly Economic Survey, although the proportion of businesses that increased their workforce over the third quarter of the year rose by a net 4%, the future outlook is less optimistic with a 9% slide in the proportion of firms that expect to add to headcount before the end of the year.

“The proportion of people who are opting out of the workforce for various reasons has risen throughout this year, creating the tightest labour market in years. The latest data shows this has not changed but unemployment is now rising, which poses a significant concern for the road ahead as our economy continues to stagnate.”

Autumn Statement must set out long-term economic plan

While Chancellor Jeremy Hunt will seek to reassure the financial markets via expected tax rises and spending cuts in Thursday’s Autumn Statement, Scott said it was vital to give businesses something to grasp in the short and long terms.

He added: “The Autumn Statement provides the Chancellor with a great opportunity to restore business confidence for many, by providing a long-term economic plan that invests in people, skills and infrastructure, as well as radically improves our trading relationships with key markets, not least in Europe.

“Reforms should include supporting greater business investment in workforce training, adopting flexible working practices, expanding the use of apprenticeships, and a comprehensive reform of the Shortage Occupation List to allow sectors facing urgent demand for skills to get what they need.

“In other words, this is about ‘getting the basics right’ – something the Chamber will be pressing Government to do when we launch our Business Manifesto for Growth in Westminster next week.”