Coronavirus: 700,000 jobs lost since March

Almost 700,000 workers have lost their jobs since the coronavirus pandemic began in March, according to the latest government statistics.

The HM Revenue and Customs and Office for National Statistics data showed early indicators for August suggest that the number of employees in the UK on payrolls was down around 695,000 compared with March.

The unemployment rate spiked in May to July but fell back again in August and economic inactivity has also fallen. 

Meanwhile the number of people who are estimated to be temporarily away from work, including furloughed workers, has fallen.

However it was still more than 5m in July, with more than 2.5m of these being away for three months or more.

There were also around 250,000 people away from work because of the pandemic and receiving no pay.

The estimated UK unemployment rate for all people was 4.1 per cent, 0.3 percentage points higher than a year earlier and 0.2 percentage points higher than the previous quarter.

The single-month estimate for the unemployment rate, for people aged 16 years and over in the UK, for July 2020, was 4.4 per cent, 0.6 per cent higher than June.

Youth employment schemes ‘must go further’

Figures for May to July 2020 show a large decrease in the number of young people in employment, while the unemployment rate increased.

The Treasury launched a “Kickstart” scheme to tackle the issue of youth unemployment. Employers can offer jobs to those claiming universal credit between the ages of 16 and 24.

The government will fund each job, paying 100 per cent of the minimum wage, national insurance and statutory pension contributions for 25 hours per week.

“The Government must act quickly to counteract job losses and prevent the scarring effect of long-term unemployment”, said Tej Parikh, chief economist at the Institute of Directors (IoD). “With youth unemployment increasing, the Kickstart Scheme targets a critical area, but the Treasury should go much further.”

Job vacancies rise with construction sector showing signs of recovery

Vacancies during this period were 30 per cent higher – at an estimated 434,000 – than the record low recorded between April and June.

The ONS said this rise had been driven by smaller businesses, some of which are reporting taking on additional staff to meet coronavirus guidelines.

The construction and transport and storage sectors are showing signs of recovery, with estimated quarterly increases in vacancies of 4,000 and 3,000 respectively.

Arts, entertainment and recreation has struggled the most, as the majority of venues have been unable to open. The sector has the lowest vacancies per 100 employee jobs ratio of 0.5.

The estimated number of jobs in the UK had generally been increasing since 2013 but fell by 354,000 to 35.41m from March to June 2020, the largest fall since September 1992.

Jack Kennedy, UK economist at job site Indeed said: “Indeed’s data shows many jobseekers are reacting to the lower number of job postings by searching more outside their occupation, and seeking to transfer their skills to sectors which are still seeing growth.”

Average weekly wages inch higher as furloughed staff return

The ONS recorded some pick-up in average weekly wages, including bonuses, from minus 1.6 per cent in June to minus 0.1 per cent July.

This largely reflects the return to work of some furloughed staff, most of whom only received 80 per cent of their pay while not working.

The average wages will likely recover further as the furlough scheme comes to an end next month.

“Wage growth likely will remain weak enough to persuade the [Monetary Policy Committee] that more monetary stimulus is needed later this year, in order to stand a credible chance of hitting the 2% target for inflation in the medium term”, said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

Furlough scheme ‘limits pandemic’s full impact’ on jobs

The continued use of the furlough scheme means the full impact of the pandemic on jobs is muted somewhat.

“Despite the slight rise in the unemployment rate, the furlough scheme continues to limit the pandemic’s full impact on headline job figures”, said the British Chambers of Commerce’s (BCC) head of economics Suren Thiru.

The ONS data shows the number of employees on payroll fell by approximately 659,000 between March and July.

While the number of claimants of jobseeker’s allowance and universal credit increased to 2.7m in August, a monthly increase of 2.8 per cent and a 120.8 per cent rise since march.

It is “a clear warning that the full impact of Coronavirus on the UK labour market is yet to come”, said Thiru.

Numerous economists have warned that unemployment will grow sharply as soon as the government’s job retention scheme tapers.

“Redundancies are only likely to increase as state support for employee wages ceases at the end of October. For many companies, demand remains very much limited, with local lockdowns and renewed restrictions adding to the difficulties”, added the IoD’s chief economist Tej Parikh.