Stuart Gentle Publisher at Onrec

The big UK unemployment North-South divide

Article by Shane McGourty,

While politicians may have us believe the gap between the North and South of the UK is shrinking, we know that the concept of a North-South divide has been around for decades, with many experts claiming it is growing wider. In terms of unemployment, there are clear divisions between the North and the South, but is it possible to close the gap and strive towards a more balanced picture of job creation and growth across the country?

The latest data from the Office for National Statistics (ONS) shows that whilst UK unemployment has fallen to 4.5% - its lowest level since 1975 – there is still a difference between the North and the South. In the three months to May 2017, the highest UK unemployment rate was in the North East at 6%, while the lowest was in the South East, at 3.4%.

It is of course positive that unemployment rates across the UK are so low, especially when you take Brexit into account and the uncertainties it has thrown up. However, it does seem like the North still has quite a bit of ground to make up.

A 2016 report by Joseph Rowntree Foundation (JRF) revealed that 10 of the UK’s top 12 struggling cities are based in the North of England, while not one city in the South featured in the top 12 or 24 of the index.

This chimes with the ONS 2016 Annual Population Survey, which found that the 10 cities with the lowest employment rate were primarily in the North, including Hull, Sunderland, Blackburn, Bradford and Liverpool. In contrast, the 10 cities with the highest employment rate were made up of mostly southern locations, such as Crawley, Aldershot, Gloucester, Worthing, Swindon and Reading.

With high employment rates across the South East and South West of England, as well as lower than average employment rates in Scotland, the North East and the North West, it would appear there is still a clear North-South divide in the UK.

And it’s not just employment rates that illustrate the division. A report published in July, by the Institute for Fiscal Studies, found large income gaps between different regions of the UK. For instance, average salaries in the Midlands, Northern England and Wales were no higher than they were in the South East almost 20 years ago. In Britain's poorest region, the West Midlands, earnings were 25% lower than in the South East.

Campbell Robb, chief executive of the JRF, which funded this report, says it’s crucial we “rebalance our lopsided economy”, and is now urging the government to “deliver a plan that drives up skills and productivity across the country”.

TUC general secretary Frances O’Grady adds that these findings cannot be shrugged off: “People are still missing out on the chance of decent, well-paid work because of where they live. Ministers need to explain how they’ll deliver growth and boost living standards in every corner of the country.”

So why is there such a regional disparity? “London has, and always will be, a magnet for wealth and talent and it is this pull that makes the South a seemingly more attractive option to businesses and highly-skilled candidates,” comments Jo Sellick, managing director of recruitment specialist Sellick Partnership. “However, it is unrealistic to expect every part of the UK to have the same employment rate as the average. We should instead be focusing our efforts on creating a more balanced picture of job growth across each region.”

Here at AdView, we feel the country is too London-centric and believe the government must take a regional approach to job creation. Companies should be incentivised to startup or relocate to areas where there are high numbers of people available for employment, but these people need to have the appropriate skills, training and education to help companies to grow. To achieve this regional growth, the government needs a longer-term strategy that places the demand for skills strategically around the country and spreads the wealth and opportunities.

Freelance photographer Nick Rawle moved from his home town of Oxford to Loughborough in the East Midlands 12 years ago and says that, in his field, the divide is essentially “London - everywhere else”, with the East Midlands feeling very poor, economically, compared to the South East.

Despite several years of success as a photographer, he has noticed a marked slow-down in bookings since last year and fears he can no longer run his business there. “Many of my clients in the construction and property sectors are no longer buying from me, and I’ve had to rely on finding work further afield to make ends meet, as prospects here in the East Midlands remain unappealing. I’m giving serious consideration to moving back down South to remain as a freelance photographer, as I don't feel there is enough work locally to support me here.”

There have been some efforts to address inequalities across the UK, with government initiatives such as the Northern Powerhouse, which aims to boost economic growth in the North, as well as plans for a new industrial strategy, which should start to take shape later this year.

Yet to help close the gap, there needs to be a significant increase in the number of skilled jobs outside of London and the South of England. Sellick believes a two-pronged approach is required. “First, we need to invest more in home-grown talent, especially as we make our exit from the EU in the years to come. Second, we need to attract more big business to areas outside of London and the South.”

Dan Tomlinson, research and policy analyst at Resolution Foundation, adds that we need to look in detail at regional employment rates among different sections of the population that have traditionally struggled in the labour market, such as younger people or those with disabilities. “Understanding why these groups have much higher employment rates in some parts of the country than others would help policy makers to design local policies that help these sub-groups into work.”

Regional employment gaps have now persisted for a long time. Yes, it may be unrealistic to expect absolute equality, but this picture of uneven jobs growth must be rebalanced if we are to reach full employment in the UK.