Chamber issues economic warning despite slight rise in East Mids unemployment rate

Unemployment in the East Midlands has increased for the first time since the strictest Covid-19 restrictions were rolled back, new figures show. 

The region’s unemployment rate rose from 4.1% for the three-month period between July and September to 4.2% between August and October, according to the Office for National Statistics’ (ONS) latest labour market report.

This rate had previously decreased between May to June, while it has now fallen into line with the national average having been lower every month since April. 

Across the UK, the number of job vacancies in the three months to November soared to more than 1.2 million, another record and 419,000 more than the pre-pandemic period of January to March 2020. 

East Midlands Chamber chief executive Scott Knowles said: “While the jobs market has been in a much better place than many people may have expected – and the East Midlands unemployment rate is far below the 5.9% peak we saw in the three months to December 2020 – we should be slightly concerned about it going in the wrong direction.

“This reflects the ongoing difficulties many businesses have faced in hiring people with the right skills. In the Chamber’s latest Quarterly Economic Survey for Q4 2021, two-thirds (64%) of East Midlands businesses attempted to recruit – but four in five (80%) of those faced problems in filling those vacancies.

“This meant that while a net 17% of our region’s organisations grew headcount in the previous three months, there was a slowdown compared to the previous quarter when a net 25% of businesses did so.

“Despite some predictions that the end of the furlough scheme in September would release workers back into the labour market, the latest ONS figures suggest this just isn’t the case and our issues are far more deep-rooted.

“We have skills gaps across the board that urgently need to be addressed. Many of these are longstanding but as Brexit and Covid have driven a more deep-seated decline in labour supply, they have come to the fore more prominently.

“The concern here is that an inability to address the skills gap and bolster productivity will dampen the economic recovery, which is now in a very delicate situation as UK output has stagnated – rising only 0.1% in the month ending October – and inflation rising fiercely to put a squeeze on finances.

“The reintroduction of Covid-19 restrictions to combat the Omicron variant could cause a further drag on confidence as many businesses may hold back from investing in recruitment while uncertainty reigns.

“So while the labour market data may not show the most alarming trend, it’s another warning light for the Government about the serious damage that could be caused to the economy if we continue this stop-start approach – particularly without the necessary financial support for businesses.”