The North East labour market faces many different issues in the coming years. Traditionally the region has experienced high unemployment and inactivity relative to the national average, whilst there has been a significant improvement in each of these areas, there is still much work to be done.

A vital part in solving each of these problems is ensuring that the skills within the economy match the requirements of employers. Following the decline of some of the region’s major industries, the North East experienced extremely acute structural unemployment. Former employees in these industries were unable (or unwilling) to find relevant work in the area and as a result wee eventually either moved onto incapacity benefit, or became long term unemployed. This situation seems to be turning around, with a new generation of workers finding meaningful employment in the service and public sectors. Traditional areas such as manufacturing still play a major part in regional employment, but theis role has been diminished, and will continue to diminish over time.

The region also has a reduced supply of skilled workers relative to the UK, much greater proportions of the region’s population possess few qualifications and as a result the proportion of people employed in low level jobs is greater than the national average.

Employment has also improved, the rate for the North East stands at 70.8% compared to a national rate of 74.4%, the gap has closed from 5% in 2005 to 3.6% in 2007. Unemployment in the region has remained steady at around 6.6% during the same period, whilst the UK rate has risen from around 4.6% to 5.4%. Inactivity has reduced to 24% in the North East compared to 21.2% in the UK, in this instance; the UK rate has remained steady, while the North East rate has fallen.

Fact File

• The employment rate for OECD countries is 66.5%, and the rate for the euro area is 67.6%.
• The unemployment rate the EU15 in 2005 was 8.4%.
• The UK employment rate is around 74.4%.
• NE employment has risen from 68% in 2000 to around 70.8% in 2007.
• Around 14.5% of people claiming benefit in the UK, do so for 12 months +.
• Only 12% of people claiming benefit in the NE do so for 12 months +, this level has fallen at a rate greater than the national average since 2003.
• The UK unemployment level was 5.4% in 2007.
• Unemployment levels in the North East have fallen from nearly 9% to around 6.6% since 2000.
• The region is expected to have the lowest employment growth in England between now and 2012, the NE’s share of total UK employment is expected to decline to 3.4% by that time.
• All expected employment growth in this region is accounted for by females, male employment is expected to decline by 10,000 by 2012.
• The proportion of workers working part time has decreased in the past 5 years, however this is mainly due to a rise in the number of full time employees in total.
• NE inactivity levels are still amongst the highest in the UK.
• The North East has been one of the most effective regions in increasing its activity rates since 1992. Only Wales has improved by more.