Chamber: Tightening labour market is a ‘ticking timebomb’ for businesses

The East Midlands’ unemployment rate remains the lowest in the UK at 2.4% – having halved in just over a year.

The latest figure, reported by the Office for National Statistics (ONS) for the period between April and June 2022, is below the 3.8% national average.

In March to May 2021, it was 4.9% but has fallen almost every month since then. 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 – has grown by six-tenths of a percentage point to 21.9% during the same period. 

East Midlands Chamber chief executive Scott Knowles said: “These latest statistics show that our region’s businesses are creating plenty of jobs and people are filling them. We said throughout the pandemic that firms in sectors most directly affected by restrictions remained viable once they were allowed to trade freely and the data proves this is the case.

“However, the labour market remains incredibly tight, with the number of job vacancies in the UK economy around the highest on record. Competition for skills and labour continues to drive up wage costs, which is adding to the growing list of concerns facing organisations – which are being hit left, right and centre by the cost of doing business crisis, driven by the highest inflation in almost 40 years.

“Two-thirds of East Midlands businesses told us in our Quarterly Economic Survey they attempted to recruit between April and June, but 82% of this cohort struggled to fill roles. With four in 10 businesses now at capacity, the lack of access to people is becoming a ticking timebomb. 

“The lack of human resource means they are struggling to meet customer demand and are often forced to turn away new business. This is restricting growth – as reflected by the latest figure showing GDP fell by 0.1% in the second quarter of 2022 – and dampening confidence among businesses to make the investments that will drive the economy forward again.”

Scott said it was “time for the Government to listen to businesses” as he outlined some key policies that would help firms to fill vacancies and bring people back to the labour market.

“The Government can help ease the growing pressure in the labour market at no extra cost to the Exchequer,” he added. “We need an immediate review and reform of the Shortage Occupations List to include more jobs at all skill levels, giving firms breathing space to train and upskill their workforce. 

“We also need to encourage economically inactive people back into the labour market through access to publicly-funded rapid retraining opportunities. Businesses must be part of the solution too by creating the right workplace conditions, for example by providing flexible working practices, training opportunities and a focus on workplace healthcare and support.

“There are also innovative schemes for firms to tap into and access funding, including the UK Community Renewal Fund-backed Kickstart Accelerator, in which the Chamber has helped organisations in our region create more than 160 jobs for young people.”

For more information about the Kickstart Accelerator, and other funding and business support opportunities available via the Chamber-delivered East Midlands Accelerator project, visit this link.