North East jobs market still trailing behind rest of the country as cost of living crisis grows

And the data from the Office for National Statistics (ONS) shows that between April and June, the region was also behind the rest of the UK in terms of the number of people in work and those classed as economically inactive.

The average UK employment rate for people aged 16 to 64 was 75.5% over the three months, compared to 71.4% in the North East. The average national unemployment rate was 3.8%, but 5.1% locally.

And the economic inactivity rate – working age people not in work and not looking for a job – was 21.4% nationwide, but 24.9% for the North East.

North East England Chamber of Commerce policy manager Marianne O’Sullivan said the figures showed the region’s job market had made little progress in the last 12 months: "Year-on-year in the North East there has been a 0.6% increase in economic inactivity, a 0.7% reduction in unemployment and the employment rate is unchanged,” she said.

"The small reduction in unemployment is welcome but we need to reduce the levels of economic inactivity in the region which will also help to tackle some of the labour shortages businesses are facing.

"Closing the gap to the national averages will be one of the key measures of success for the next Government."

North East Local Enterprise Partnership chief executive Helen Golightly OBE said the latest data showed people were increasingly struggling with the cost of living: “PAYE data today shows the region’s median employee pay continues to increase at a similar rate to nationally, at a time when costs of living in areas like energy and food are increasing.

"Without intervention, we can expect a difficult economic situation for local communities and businesses over the coming months with increasing prices impacting on costs, investment and employment.”

The ONS figures show regular pay, excluding bonuses, grew by 4.7% over the three months to June, slightly ahead of expectations – but inflation hit a new 40-year record of 9.4% in June and is expected to peak at around 11% later this year.

The ONS said this meant a 4.1% drop in income in real terms – the biggest slump since records began in 2001.

CBI director of employment Matthew Percival said businesses were doing their best to help staff but were facing their own challenges from spiralling costs: “It’s another month where pay falls further as businesses and workers struggle with rising costs like energy prices,” he said.

"Employers are doing their level best to support staff through this period, but the vast majority can’t afford large enough pay rises to keep up with inflation.

“Speaking to employers, it’s clear that filling roles remains a primary concern and is proving a handbrake on the UK’s economic prospects.

“The number of older workers now economically inactive continues to worsen and it’s up to firms and Government to find new ways to attract people back into the labour market.

“The incoming government will need to add greater flexibility to the apprenticeship levy, review the Shortage Occupation List and align skills gaps with education and training.”