Headlines
- Unemployment in the North East has traditionally been high, but the gap between the region and the national average has narrowed significantly over the past 15 years.
- The proportion of the North East population claiming JSA was at 6.9% in January 2011 - the highest of all the regions in the UK.
Introduction
The labour market is a key mechanism in any economy and is concerned with how workers and employers interact and the resulting pattern of wages, employment and income.
Low rates of economic participation and worklessness are key elements of the economic output gap the region faces relative to the rest of the UK. In recent years the North East has shown improvement, both in absolute and relative terms, across a wide range of labour market indicators. However, despite for example halving the employment gap in the last decade, the region still lags behind the UK average in most areas of the labour market. One North East produce a quarter labour market brief which is available here.
Employment
Economic activity rates measure the proportion of the population that are either in work or looking for work i.e. the sum of employed and unemployed people. Those people that are not economically active are economically inactive. The North East’s activity and employment rates are below the national average and have been for some time. The region’s economic activity rate stood at 73.0% in the year to March 2010 compared to the UK’s 76.3%. Over the same period the North East’s employment rate was 65.8% against the national rate of 70.2%.
In addition to the annual data presented above, the Annual Population Survey (APS), reports monthly on a variety of Labour Market material. In terms of employment the region is around 73,800 short of where it needs to be to match the UK employment rate of 70.2% (based on Apr 09 - Mar 10 figures)
Employment – gender differences
Whilst both North East male and female employment rates are below the national averages, the region’s female employment rate is significantly closer to the equivalent UK rate than is the male rate. In the year to March 2010 the region’s male employment rate was 69.1%, well below the UK rate of 75.1%.
In contrast, the North East’s female employment rate was 2.8 percentage points lower than the UK rate – 62.5% in the region compared with 65.3% for the UK.
Unemployment
Unemployment rates in the North East remain as some of the highest in the country. In the 12 months up to March 2010 the region’s unemployment rate stood at 9.9%, well above the UK rate of 8%.
Unemployment started rising in most parts of the country in early 2008 and continued its upward trend through the first half of 2009 and into 2010. Whilst closing to within 1% of the UK rate on a number of occasions between 2002 and the end of 2007, North East unemployment has remained consistently above national levels.
Claimant Count
The claimant count measures the proportion of the working age population that are claiming Job Seekers Allowance (JSA). JSA was introduced on October 7th, 1996 and is a contributory or income-related benefit paid to people under State Pension age who are available for and actively seeking work of at least forty hours per week.
The North East has had a persistently higher claimant count than the national average, but the gap had been closing until the end of 2008. Both regionally and nationally claimant counts had been decreasing until August of 2008 after which both claimant counts show a sharp rise. Claimant count peaked in Feburary 2009 and remained relatively stable in the region at around 7.1% for nine months. The most recent data (January 2011) shows a 0.4% change on the previous month's figure of 6.5%. However, this figure is 0.6% lower than the same period 12 months ago. A more detailled analysis of these figures reveal that the claimant count growth rate among the 16-18 age group is disproportionally higher across the regions and nations of the UK than the claimant count growth rate for the population as a whole.
Compared to the other regions in the UK the North East has the highest claimant count at 6.9% in January 2011. This is 2.3 percentage points above the national average. Every region in Great Britain has experienced an increase in claimant count of between 1.2 and 3.3 percentage points since September 2008: Northern Ireland has seen the largest sub-national increase of over 3 percentage points over the same period.
Economic inactivity
People are either economically active or economically inactive. Therefore the economic activity rate plus the inactivity rate will equal, in this case, the working age population. Economically inactivity in the region remains above national levels – 27% against 23.7% for the UK (Apr 2009 - Mar 2010).
Whilst the region’s inactivity rate has flutuated over the past 5 years, it remains stubbornly above national rates.
Earnings
For the North East, in April 2009 median gross weekly earnings were £421 for full-time employee jobs on adult rates whose earnings were not affected by absence. Weekly earnings were £93 higher for men than for women - £478 compared with £385. Equivalent UK earnings were £489, £531 and £426 implying that both male and female earnings in the region were some 90% of UK rates in 2009. Despite the earnings gap widening between 2000 and 2003 in particular, lower quartile earnings have since recovered to stand at around 92% of the UK rate but median and upper quartile earnings remain lower at 90%.
Employees working in the North East are, on average, paid less than in other parts of the country. London employees are paid the highest rates with £599 whilst jobs in Northern Ireland (the lowest paid region other than the North East) typically paid £440 per week.
Part-time working
The number of people working part-time as a proportion of all those in employment was similar for the North East and the UK –25.4% against 25.5% nationally (Apr 2009 - Mar 2010).
The North East has the lowest self-employment rate in the UK. The year through to March 2010 saw the region’s self-employment rate stand at 5.9% - significantly below the UK rate of 9%.