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East Midlands Chamber News

Skills shortages behind slight rise in unemployment in East Midlands, says Chamber

Challenges in finding people with the right skills to fill vacancies may be the reason behind a slight drop in the number of people in work, believes East Midlands Chamber.

The region's unemployment rate for the period between March and May 2021 was 4.9%, according to the latest figures by the Office for National Statistics (ONS) published today.

It marked a 0.1% increase on the previous three-month period and is the same percentage higher than the UK national average.

This remains well above the pre-Covid figure of 3.7% (reported for February to April) but also far below the 5.9% peak for between October and December 2020.

Nationally, the biggest headline in the ONS labour market bulletin was that job vacancies surpassed pre-pandemic levels with 862,000 jobs on offer between April and June – 77,500 higher than the first three months of 2020.

The number of people on payrolls also grew by 356,000 in June to 28.9 million, the biggest rise since the start of the pandemic.

East Midlands businesses report skills shortages

Scott Knowles, chief executive of East Midlands Chamber, said: “The significant rise in payroll employment suggests the UK jobs market is continuing to improve as the economy gradually reopens.

“Surging demand for labour amid the economy unlocking, the rapid vaccine rollout and continued Government support helped drive higher payroll employment in June, despite the delay to the end of the roadmap.

“However, the rise in vacancies coupled with a slight increase in the unemployment rate – which follows a trend of steady decline throughout the first half of the year – confirms the ongoing struggle to hire staff.

“In the Chamber’s latest Quarterly Economic Survey for Q2 2021, a net 20%* of East Midlands businesses increased their headcount in the three months to June but 48% reported difficulties in recruiting people with the required skills, and further investigation reveals these were across a wide range of roles.

“The recruitment difficulties faced by firms go well beyond temporary bottlenecks and with many facing an increasing skills gap, staff shortages may drag on any recovery.

Turbulent period ahead for jobs market

“The July reopening will further boost labour demand, with our survey finding a net 41% expect to hire more people over the coming three months – with only 3% anticipating a decrease. 

“However, the UK jobs market is moving into a more turbulent period with unemployment likely to drift moderately higher in the near term as the furlough scheme winds down.

“More needs to be done to ensure businesses have access to skills when these can’t be recruited locally – including access to rapid and agile training and re-skilling opportunities for adults in the workforce, and a more flexible immigration system that allows firms to access the high and low-skilled workers they need.”

The regional breakdown of the ONS labour market stats can be found here.