Welsh Unemployment Rate Rises to 5.4%, Surpassing UK Average
The latest labour market figures from the Office for National Statistics reveal a concerning trend for Wales, where the unemployment rate has climbed to 5.4% for the period from September to November last year. This represents an increase of 0.5% compared to the previous quarter and places Wales above the overall UK unemployment rate of 5.1%.
Regional Comparisons Across the UK
When examining the data across different nations and regions, Wales finds itself in a challenging position. The unemployment rate in England stands at 5.3%, while Scotland reports a significantly lower rate of 3.7%. Northern Ireland boasts the lowest figure at just 2.1%. However, London experiences the highest unemployment rate across the UK at 7.2%, followed by the north-east of England at 6.2% and the east Midlands at 6%.
Economic Inactivity Remains a Persistent Challenge
Beyond unemployment, Wales faces substantial issues with economic inactivity. The proportion of economically active working-age adults in Wales is 75.5%, which is notably lower than the UK average of 79.2%. This figure is only surpassed by the north-east of England at 74% and Northern Ireland at 73.6%.
Conversely, the economic inactivity rate in Wales stands at 24.5%, equating to approximately 479,000 people. Although this represents a decrease of 8,000 individuals compared to the previous quarter, it remains significantly higher than the UK average of 20.8%. Only Northern Ireland at 26.4% and the north-east of England at 26% report higher economic inactivity rates.
Welsh Government Response and Alternative Data
In response to these figures, a Welsh Government spokesman highlighted that "evidence from a range of sources suggest the labour market in Wales has followed similar trends to the UK since the pandemic." The spokesperson referenced the Annual Population Survey, which indicates an unemployment rate of 4.5% for people aged 16 and over in Wales, compared to the UK rate of 4.2%.
The Welsh Government emphasised their ongoing efforts to support employment, stating they have "supported about 46,000 jobs this Senedd term through business support." Specific programmes mentioned include Communities for Work Plus, which has assisted approximately 19,900 people into employment, Jobs Growth Wales Plus with 18,000 participants, and ReAct Plus supporting 6,200 individuals.
Officials have expressed concerns about the reliability of Labour Force Survey data, noting that the Office for National Statistics itself advises caution when interpreting these statistics as the sole measure of Wales' labour market. They recommend using a range of sources for greater accuracy while the ONS develops a new survey methodology.
Broader UK Labour Market Context
The latest ONS data reveals that unemployment across the UK has reached its highest level in nearly five years. Average regular earnings growth has declined to 4.5% in the three months to November, down from 4.6% in the previous period and representing the lowest rate since April 2022. When adjusted for Consumer Prices Index inflation, real wages showed a modest increase of 0.9%.
December witnessed a significant reduction in payroll employees, with a decline of 43,000 individuals – the largest monthly decrease since November 2020 during the pandemic's peak. The retail and hospitality sectors have been particularly affected, with wholesale and retail experiencing a 72,000 annual reduction in payrolled employees and hospitality seeing a 70,000 annual decline.
Liz McKeown, ONS Director of Economic Statistics, commented: "The number of employees on payroll has fallen again, with reductions over the last year concentrated in retail and hospitality, and reflecting ongoing weak hiring activity." She added that while vacancies showed a slight increase of 10,000 to 734,000 – the largest rise since the second quarter of 2022 – the overall number has remained broadly stable over the past six months following a prolonged decline.
These sectors have faced considerable challenges due to rising employment costs over the past year, including increased National Insurance contributions and substantial minimum wage increases, contributing to the current labour market difficulties.
