One of the figures I keep a close eye on is the local unemployment rate. It has consistently fallen since 2010 and that is a good thing, but the recent numbers show a small jump to 830, or 1.8 per cent of the local population. This ranks us in Wyre Forest at the 411th most unemployed constituency, where 1st has the highest unemployment rate (Birmingham Ladywood, at 10.3 per cent), and 650th is the lowest (South Cambridgeshire at 0.6 per cent). We are below average unemployment by any headline measure and rank ahead of both Redditch (2.2 per cent) and Worcester (2.0 per cent) in the county. The national rate is 4.7 per cent, and is the lowest it has been since October 2004. The previous low was August 1975.
It is a good thing that more people are getting into jobs, especially in Wyre Forest and I am certainly disappointed to see the unemployment rate rise locally, especially when I know for a fact that there are jobs available that bring with them training. This is a subject I have discussed in previous columns.
But when looking at unemployment figures, it is also important to look at local wages. Again, local comparative wages have been increasing and again, that is a good thing. Economists look at unemployment figures and most would agree that an unemployment rate of around 2.5 per cent leads to a stable local economy. At 2.5 per cent there are enough workers available to meet the demand of new employers seeking employees, so new businesses can start up or existing businesses grow without having to push wage prices to attract workers. That creates competition and so the economy matures and develops at its own pace. Below 2.5 per cent there is a shortage of workers and so wage prices start to increase. This puts pressure on local employers to keep workers and so they pay up. In turn, this means that uncompetitive businesses fail, but this tends to increase the productivity of the local area. Businesses become more sophisticated, skills get better, productivity improves and general wellbeing improves, but in the short term, there is a certain amount of pain and uncertainty amongst those businesses that fail. But if it goes too far, you end up like South Cambridgeshire where house prices are beyond the reach of most local people.
Wyre Forest is well placed to see improving wages. That is something that I welcome, but wage rises need to be accompanied by increasing skills. Skills improvement will take Wyre Forest to the next level.