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At least 4,000 people dropped out of the labour market in the North East over the past year.

Jobs figures released this week showed that unemployment fell by 5,000 over the past 12 months – but that didn’t mean the unemployed were finding jobs, because the number of people working in the region rose by only 1,000.

It is explained by the fact that the number of people classed as “economically active” in the region – which means they are either in work or looking for a job – fell by 4,000 people in the past year.

Business leaders expressed disappointment at the small rise in job numbers and warned that the region was feeling the effects of job losses in Teesside, including the closure of the SSI steel plant in Redcar.

The statistics show there are now 113,000 people classed as unemployed in the North East, giving an unemployment rate of 8.7%.

This is down from 118,000 people in the same period a year who, when the unemployment rate was 9.1 per cent.

But it is still the highest unemployment rate in the country.

The national rate is 5.2 per cent, and in London, the region with the second highest rate of unemployment, it is 6.3 per cent.

At the same time, the number of people in work rose by just 1,000 – and the number classed as “economically active” fell by 4,000 even though the region’s population is increasing.

The unemployment statistics show that younger people are particularly likely to be out of work.

There are 40,000 people aged 16 to 24 who are unemployed in the North East, an unemployment rate of 20.2 per cent.

And 55,000 people in the North East work part time – but say they would prefer a full time job if they could get one.

They are simply classed as employed in the official figures.

Separate figures for the number of people claiming Jobseekers Allowance show that 19,885 people are claiming in Tyne and Wear, down by 4,020 over the past year.

There are 6,805 claimants in County Durham, down by 1,670, and 4,250 in Northumberland, down by 730.

Paul Carbert, Policy Advisor at the North East Chamber of Commerce (NECC), said: “It seems that the unfortunate news on job losses in Teesside earlier this year are reflected in these figures, despite the positive signs of increased recruitment we have picked up from our members across the region.

“Yet again, the labour figures are generally flat, with some cause for concern in the stubbornly high unemployment rate.”

He added: “During September 2015 the number of workforce jobs in the North East decreased by 26,000, the largest fall in the country, however the majority of this appears to be due to a decline in self-employment, rather than employee jobs.

“Public sector employment is down 5,000 over the year, although fortunately this is matched by an increase in private sector employment of 5,000.”

Nationally, the number of people out of work was 1.7 million, down by 244,000 over the course of the year.

It gives a national unemployment rate of 5.2 per cent.

And the number of people in work nationwide rose by 505,000 over the course of the year.

Employment Minister Priti Patel said: “We are ending the year on a high, with a record rate of employment, and wages continuing to grow.

“Today’s figures show half-a-million more people in work compared to this time last year across the UK, which means hundreds of thousands of families are going into the festive season with the security and hope for the future that work brings.

“In fact, the North East saw the third fastest quarterly employment growth of all the UK regions and nations, and faster than London.”

She highlighted plans to introduce a “living wage” for people aged 25 and over, which is 50p higher than the minimum wage.

“Next year we will build on this positive story with the introduction of the National Living Wage and the new offer of 30 hours free childcare for working families. In this way we are delivering the high-wage, low-welfare society with opportunity and security at its heart that we know the British people want.”