Unemployment rises and wage growth slows but labour costs mount - Chamber

The jobs market has weakened in the West Midlands and nationally as wage growth slowed and the rate of unemployment increased, new figures reveal today.

According to the Office for National Statistics (ONS), the employment rate in the West Midlands fell by 0.3 per cent to 73.2 per cent in the March to May period, while unemployment rose significantly by 1.3 per cent.

Meanwhile, the national unemployment rate rose to 4.7 per cent - its highest in four years - though the ONS has said the figure needs to be treated with caution due to problems with how the data is collected.

Compared with the same period (March to May) last year, the employment rate in the West Midlands has remained static, the unemployment rate has risen by 0.5 percentage points and economic inactivity has declined by 0.4 percentage points.

The ONS said the number of vacancies fell again to 727,000 for the April to June period, marking three continuous years of falling job openings.

Wage growth has also slowed - annual growth in employees’ average earnings for both regular earnings (excluding bonuses) and total earnings (including bonuses) was 5 per cent.

This is down from 5.3 per cent for regular pay, and 5.4 per cent for total pay.

Emily Stubbs (pictured), head of policy at Greater Birmingham Chambers of Commerce, said: “Whilst wage growth has slowed, it continues to outpace inflation, as mounting labour costs loom large on Greater Birmingham businesses.

“Combined with persistent skills shortages and above-average-and-rising unemployment, these pressures threaten regional investment and productivity.

“Having already faced sharp increases in employer National Insurance Contributions earlier this year, businesses are bracing for further increases in labour costs.

“Many firms have expressed concerns about the implications of the potential £5bn cost of the Government’s Employment Rights Bill, most of which is expected to come into effect in 2026.

“And plans announced earlier this week for a review of pension auto-enrolment contributions could also lead to further cost burdens.

“West Midlands firms need clear progress on economic strategy, skills provision and trade talks, to rebuild confidence and drive investment.

“If the Government is serious about unlocking economic growth, the Chancellor must find a way to balance the books in the Autumn without imposing further taxes on businesses.”

Read our latest Quarterly Business Report to find out more about how businesses are faring in Greater Birmingham.