The East Midlands’ unemployment rate has dropped for a second consecutive month to 3.3% for the period between March and May 2023, new figures by the Office for National Statistics (ONS) show.
It fell by one-tenth of a percentage point from the previous reporting period to April, moving in an opposite trajectory to the UK unemployment rate, which rose from 3.8% to 4%.
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 – dropped by three-tenths of a percentage point to 21.2%, the lowest level in a year.
East Midlands Chamber chief executive Scott Knowles said: “Despite some mild concerns earlier in the year that the unemployment rate was rising, it appears to have stabilised around historically very low levels, which reflects the great resilience of the East Midlands business community amid some very tough challenges.
“Rising economic inactivity has been one of the greatest concerns over the past year as it led to a dwindling labour market, which has restricted capacity – and therefore the ability to grow, raise productivity and bring prices down.
“While this rate remains significantly above pre-Covid levels, it’s pleasing to see this has now come down by just under 1.5% in the past nine months, giving firms more room to manoeuvre.
“Our own research backs this up but also illustrates persistent challenges, with our Quarterly Economic Survey showing seven in 10 businesses that attempted to recruit between April and June experienced problems in filling roles, compared to eight in 10 at the end of 2022.”
Impact of rising wages on businesses
Nationally, regular pay grew by 7.3% during this period, a record annual increase despite lagging behind inflation, which stands at 8.7%.
Scott added: “While recruitment problems may be easing slightly, the record rise in wages suggests firms are still facing major cost pressures as the labour market tightness has forced employers to pay more for people at a time when they are being hit by inflation and surging interest rates.
“This is perhaps why future recruitment prospects are less optimistic, with a net 6% decline in East Midlands businesses adding to their headcount for the next three months. The proportion of firms intending to invest in training also declined by 3%, with business confidence fragile.
“What we desperately need is a dedicated Government policy that supports companies to invest in their people, whether that be in upskilling their existing workforce or reskilling prospective employees to fill skills gaps.
“In our Business Manifesto for Growth, we have set out a list of policies we believe will make the required difference, including introducing flexible incentives for businesses that invest in staff training and bringing forward the introduction of the Lifelong Loan Entitlement to support retraining and the retainment of an older workforce.
“We must also tailor policies to recognise the diversity of people who are out of work and avoid a one-size-fits-all solution. We would also like to see Government work with businesses to offer support, and share best practice, on what a flexible and inclusive workplace looks like as this is another vital ingredient in enticing people back to work.”
To read the Chamber’s Business Manifesto for Growth, A Centre of Trading Excellence, visit www.emc-dnl.co.uk/manifesto.