How Entrepreneurial Activity Continues to Benefit the Economy
Posted on the 22 October 2018
With the business world and the political classes consumed by the speculation surrounding Brexit, one solid economic story is not being given the prominence it deserves.
It is the very radical change in the North East’s economic outlook as defined by the unemployment figures. Throughout the last three decades the region has been blighted as an economic blackspot primarily because of the headlines surrounding unemployment.
Last week the latest figures painted a very different picture. In the North East there are 18,000 fewer people unemployed than a year ago and 4,000 fewer than last quarter.
Over the year, the North East’s unemployment rate has fallen from 5.8% to 4.5%, the largest decline of all UK regions and nations. Over the last quarter, we have also seen an increase in employment of 6,000.
Furthermore, the growth in employment has been experienced across a number of different sectors including professional, scientific and technical activities (which includes law, accountancy, consultancy, architecture and engineering amongst others) and transport and storage.
When some commentators in the political world look at this data they suggest it is the result of ‘low paid jobs’ and the ‘gig economy’, but an examination of the official figures tells a different story.
A number of the new jobs are part-time, many are full-time. Some jobs are on flexible work contracts the majority are conventional, permanent, jobs. For the avoidance of doubt, the Office of National Statistics publishes a breakdown in the document ‘EMP01 SA: Full-time, part-time and temporary workers (seasonally adjusted)’ a long-title, but it contains fascinating information.
Essentially more than 75 percent of workers are in permanent jobs; of these just over a quarter are part-time. There are 3.3 million self-employed people who work full-time and 1.4 self-employed people who work part-time, and by far the smallest section of the workforce are those classified as temporary workers, which number just 1.5 million.
In the last year the number of full-time permanent jobs in the UK has grown by around 500,000, but the number of temporary posts fell by 80,000.
There is little room to think that these numbers represent anything but good news for the North East. They have been brought about by an increasingly active cohort of owner-managed businesses in the region. Businesses that are determined to grow and are investing with positivity no matter what the commentators or politicians say.
Thankfully, they currently have some supportive tax measures, Entrepreneurs’ Relief is an example. Brought in by Gordon Brown and maintained by the current Conservative Government it incentivises people to invest in and grow their business in the knowledge that when their life’s work is sold, the profit will only be taxed at 10%.
I hope the Government resists raising this tax next week when the Chancellor announces his Budget, which will involve more public spending, because as the job figures suggest, entrepreneurial activity continues to benefit the economy.