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Employment rate at record highs of 76.6% before COVID-19 outbreak

The Office for National Statistics has released its latest employment data for the three months to March 2020, the last update which will mainly show a reflection of life before the COVID-19 crisis.

The employment rate for the three months to March 2020 was 76.6%, the joint highest figure on record, up 0.6% year-on-year and 0.2% on the previous quarter. Estimates suggest there were around 33.14m people in employment ages 16 and above. The increase was mainly driven by women in employment, up to a record high of 15.79m, and worked aged 50 and above, up to 10.76m).

The unemployment rate for the three months was 3.9%, up 0.1% both year-on-year and quarter-on-quarter. There were an estimated 1.35m people unemployed, up 50,000 on the previous year. The economic inactivity rate was at a joint record low of 20.2%. This was down 0.7% on the previous year and 0.3% on the previous quarter.

Rate of pay growth for the quarter was 2.4% for total pay and 2.7% for regular pay. Between February and April 2020, the number of vacancies decreased by 170,000 on the previous quarter and 210,000 on the previous year.

Tom Hadley, director of policy at the Recruitment and Employment Confederation, said, “The labour market statistics from March are from a different world. The inevitable impact of the lockdown on the UK labour market can be seen in the REC’s more recent Report on Jobs which shows the quickest drop in permanent and temporary staff placements since the global financial crash. Sectors like retail, hospitality and construction have been hit especially hard, while sectors like logistics and healthcare have seen greater demand for staff. The recruitment industry is working with government and other bodies to place staff into key worker roles quickly and help the country through the coronavirus crisis.”

“The capacity for our economy to recover quickly is definitely there, with employers' medium-term hiring intentions looking positive in the REC's latest JobsOutlook report. The big jobs battle is against a longer-term unemployment crisis. Working in partnership with the experts in the UK’s recruitment and staffing sector, to advise jobseekers and find them new roles will help the economy bounce back quicker. We are ready to help.”

Peter Meyler, head of HR analytics & consulting at Barnett Waddingham, commented, “Q1’s unemployment figures are the final ‘state of the market’ reflection of the UK before the real impact of Covid-19 hit. We are now in an employment landscape that was unthinkable just a few months ago, when employment levels were at a record high and we were worrying about skills shortages. Despite heavy investment from the Government in the furlough scheme, employees are anxious and disheartened. Crucially, the issues are not just economic. The current situation is perpetuating, and even worsening, social inequalities, with those living in the lowest income households, BAME and disabled employees hit especially hard.

“Economic recovery is dependent on people getting back to the ‘new normal’ in a healthy, refreshed, motivated and engaged state. While employers have a swathe of business, financial and operational concerns at the moment, it’s absolutely vital that employee communication, engagement, wellbeing and support are priorities for them. Good employers will continue to communicate clearly and comprehensively with their employees, understand how they are feeling and respond appropriately. This will create longer-term loyalty, support and engagement from them and improve performance. The coming weeks and months will determine the extent to which employers enhance or damage their employment brand and reputation, which will be important in the longer term.”

Peter Briffett, CEO of Wagestream, shared, “We have yet to see the full unemployment figures for April but the initial signs are that it is going to be the most harrowing month in the jobs market for over a decade. Early estimates showed that the number of paid employees fell by around 350,000 in April, while the number of vacancies also decreased at the sharpest rate since the Global Financial Crisis.

“The number of job vacancies collapsing by over 200,000 offers perhaps the strongest sign yet about where the economy is headed, namely seventies-style unemployment. Not only are people losing their existing jobs, but the prospect of finding a new job is decreasing sharply as employers dig in for a turbulent few years ahead.

"The claimant count soaring to over 2m suggests a new generation are facing a potentially long time without work or, as people during the latter stages of the 20th Century referred to it, on the dole. Unsurprisingly, the hospitality sector has been hit especially hard, and could take many years to recover from the impact of Covid-19.”

Ulas Akincilar, head of trading at INFINOX, added, “Sadly these figures paint a picture of a benign, pre-Covid fool’s paradise. Just a few months ago brows would have been furrowed by the 0.1% rise in unemployment during Q1, and earnest questions asked about whether the UK’s job creation miracle had run out of steam.

“Now, however, we know this data to be totally divorced from the current economy. The labour market has always been a lag indicator, so the markets expected little from the Q1 data. True enough, the first stirrings of the the Covid crash are there – 50,000 more people became unemployed during the first quarter of the year. So market attention has focused instead on April's claimant count data, which reveals that the number of people claiming unemployment benefit soared by 856,500 last month, smashing through the two million mark.

“Coupled with the collapsing number of vacancies, the prospect of these hundreds of thousands of newly-unemployed people finding new jobs quickly looks slim. The question now is whether they will soon be joined by the millions more who have been placed on furlough. Though technically still employed, their fragile limbo cannot last forever. For now sterling is rallying, but the data’s sheen of positivity is a mirage.” 

Tony Wilson, director of the Institute for Employment Studies, said, “These figures give us the first official confirmation of what we’ve known for some time, which is that unemployment is rising faster now than at any point in our lifetimes.  But they also paint a deeply worrying picture about how the crisis is playing out across the country – with clear evidence now emerging that those areas that were worst off before the crisis have seen the biggest rises in unemployment.  If anything, today’s data underplays the depth of the crisis that we’re in, as it only counts those who had successfully claimed benefits for unemployment as at 9 April, so excluding many young unemployed and more recent claimants.  In reality, unemployment today is likely to already be close to three million.

“So having averted a disaster through the Job Retention Scheme, we now need the same urgency to support the millions now out of work or facing unemployment.  We need to act now to support people to prepare for the recovery when it comes, and we need to put in place measures to deal with the large rise in longer-term unemployment that we’re going to see later in the year – including through a jobs or training guarantee for all young people facing long-term unemployment.”

Joanne Frew, employment partner at DWF, commented, "Whilst the UK employment rate in the three months to March 2020 was estimated at a joint record-high of 76.6, 0.6% points higher than a year earlier, the quarterly figures only cover the first week of lockdown. The statistics will almost certainly deteriorate as the true impact of COVID-19 takes effect.

"Although the Coronavirus Job Retention Scheme was not announced until 20 March 2020, it will have helped avoid further job losses in the last 11 days in March. The total number of weekly hours worked in the three months to March 2020 was 1,040.6 million, 12.4 million hours less than the previous year. This is perhaps a greater reflection of the impact of lockdown, with the ONS reporting 25% fewer hours worked in the last week of March compared to other weeks in the same quarter. The UK unemployment rate for the three months to March 2020 has been estimated at 3.9%, 0.1% higher than a year earlier. The ONS reports that this is 50,000 more people unemployed than a year earlier. Although a reportable increase in unemployment, the figures do not yet show the true extent of COVID-19.

"The drop in vacancies across the UK is of concern, with the ONS reporting 637,000 vacancies in the UK in February to April 2020, 170,000 fewer than the previous quarter. The reality will be that those who are unemployed will find it difficult to gain employment quickly in the stagnant job market.”

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