600,000 jobs lost in the UK between March and May
The ONS has released its latest employment data for the months from February to April 2020. This is the first update that begins to show the impact of COVID-19 on the employment market.
Indications for May 2020 suggest that the number of employees on UK payrolls is down over 600,000 compared with March 2020. In addition, the number of vacancies advertised in May 2020 has fallen to a record low.
For February to April 2020, the employment rate stood at 76.4% (32.99m people aged 16 and above in employment), down 0.1% on the previous quarter. The number of self-employed people fell by 131,000 in the quarter. During the quarter, the actual number of weekly hours worked also decreased dramatically, down 94.2m hours, or 8.9%, to 959.9m hours.
Between February and April 2020, the unemployment rate was 3.9% (around 1.34m people unemployed), unchanged quarter on quarter. The Claimant Count, an Experimental Statistic, showed an increase in May 2020 to 2.8m, a monthly increase of 23.3% and an increase of 125.9%, or 1.6m, since March 2020.
Neil Carberry, CEO of the Recruitment and Employment Confederation, said, “The headline figures may not show it, but a lot has changed since April - with the Claimant count rising to 2.8 million, the unemployment rate is likely to be much higher than 3.9% now. But with the lockdown being eased and the economy opening up, hiring should grow. The scale of the growth in unemployment through the rest of the year will depend on consumer confidence and how employers react to the winding down of the furlough scheme. The good news is that the number of job adverts active in the UK has been slowly increasing, with more new job ads being posted every week. Helping jobseekers find new work quickly by matching them with available roles will help kick-start the economy. The recruitment industry is ready to help the government get people into work and keep unemployment down as much as possible.”
James Reed, chairman of REED, commented, “What was sadly a health emergency is now rapidly becoming an employment crisis. Millions of jobs are now at risk and what we’re seeing may just be the tip of the iceberg. There’s a real danger that unemployment could go above 15%, and as the clock continues to tick on the Government’s generous Job Retention scheme, jobseekers and businesses face an unforgiving employment landscape.
“We need to act now if we’re to ease the economic effects of the lockdown. Existing jobs must be protected, jobseekers need support finding new roles, and furloughed workers should be redeployed or reskilled. We must also find constructive ways to accelerate jobs growth and protect livelihoods – in fact it must become one of the government’s number priorities.
“Relaxing the two metre rule and re-introducing the least vulnerable demographics back into their workplaces is a good place to start. In the longer term, economic stimuli such as reforming National Insurance and employment law, re-booting apprenticeship and training schemes, investing in infrastructure and expanding research and development can help to improve current employment prospects.
“Some parts of the economy are starting to see some light at the end of the tunnel, and we must work tirelessly to identify opportunities in these areas. Non-essential retailers, car showrooms and outdoor experience providers are re-opening to the public and the wheels are slowly gathering pace for a recovery. This has been reflected in an increasing number of job vacancies across a range of sectors, for example, the ‘motoring and automotive’ and retail sectors have seen 480% and 122% month-on-month increases between March and April on reed.co.uk.”
Ulas Akincilar, head of trading at INFINOX, stated, “These figures show how successfully the UK’s huge furlough scheme has suspended economic gravity.
“Between March and May, 612,000 people fell out of the labour market. Yet during the same time more than 10 times as many – 8.7 million jobs – were furloughed.
“The number of people claiming unemployment benefit more than doubled over the same period, to 2.8 million. The 126% surge is toe-curlingly grim, but it would have been so much worse without the furlough scheme.
“But much like the wider lockdown, finding an exit strategy from furlough has no easy solution. The blunt truth is that many of the millions of furloughed workers no longer have jobs to go back to.
“Barring an unexpected V-shaped recovery in the economy, the reality is that as the furlough scheme is wound down in coming months, many more people will have no choice but join the UK's rapidly lengthening dole queue.
“Furlough is a painkiller not a cure, and unless the easing of lockdown powers a surge in demand, there will be a lot more pain to come for British workers.
“For much of June, the UK’s main share indices have been socially distancing from the country's economic performance. These jobs figures have given them a sudden and harsh reality check.”
Tony Wilson, Director of the Institute for Employment Studies, added, “If the public health crisis is just starting to ease, today’s figures show that the unemployment crisis is only just beginning. There can be no doubt now that we are on course for claimant unemployment of three million by next month, and it may well reach the highest ever recorded. It’s clear too that this crisis is hitting many poorer areas hardest – with coastal towns and ex-industrial areas seeing particularly big increases in unemployment.
“We have seen some tentative signs in the last week that hiring may just be starting to pick up again, but with the Job Retention Scheme beginning to wind down from the end of next month we need urgent measures now to kick-start hiring and encourage employers to keep their current staff on. Top of the list should be a cut to employer National Insurance. At the same time, we need to double the size of our employment services so that everyone gets the help that they need to find new work, and we need to guarantee that all young unemployed people will have the opportunity of an education place, apprenticeship or job.”
David Morel, CEO of Tiger Recruitment, said, "The latest set of ONS labour market data is a sobering reminder of the impact of the coronavirus pandemic on jobs, but we remain optimistic that small improvements are on their way.
"In May, the number of employees in the UK on payrolls is down compared with March 2020, the claimant count is up, while the number of vacancies has fallen to its lowest level since records began in 2001. Unsurprisingly, given that hotels, bars and restaurants largely remain closed, the biggest quarterly percentage decline in vacancies was in the “accommodation and food service activities” – a 70.7% decrease on the previous quarter. Hours worked were also down, with ONS reporting the largest annual decrease in total actual weekly hours on record – another knock-on effect of people being out of work, on reduced hours or on furlough.
"With the furlough scheme due to be phased out in the coming months and many sectors already having reported large-scale redundancies in the UK, it seems likely that more redundancies are on their way – particularly temp/contract staff who are currently on furlough.
"However, Tiger Recruitment data shows a few small glimmers of hope on the horizon. In May, we saw a 1.3 percentage increase in new permanent jobs briefed to us versus in April and a 1.1 percent increase in new temp jobs coming onto our books as employers become more confident about making virtual hires. We expect virtual recruitment to continue an upward trend as employers become used to the processes of remote onboarding and having their teams working remotely.
"We’ve also seen an uplift in temp-to-perm bookings as employers seek more flexibility while they gauge market performance – this trend is likely to continue as businesses feel their way through the new normal. As lockdown measures ease, market performance will be critical to informing businesses’ decisions about bringing their staff back from furlough. At the end of June, we should start to see a true reflection of what employers plan to do. And, while our own data shows only marginal gains, it gives some confidence of a jobs market that is very slowly starting to move in the right direction."
John Westwood, founder & group managing director at Blacktower Financial Management Group, commented, "Employment rate is at 76.4% in the UK. The rippling effect of high levels of unemployment will cause a decline in consumer confidence and spending which will perpetuate the recession. The UK government needs to offer help and support to prevent Britons falling through the net with no source of income.
"But now that lock-down measures are slowly being eased, we hope that hiring should grow, and the government needs to aim to increase consumer confidence as uncertainty is the last thing the UK needs as a nation."
Nine out of ten cities that have been worst affected by job losses since COVID-19 are in the north of England, according to the latest research from Adzuna.co.uk. The number of jobseekers competing for roles in Sunderland is up 120%, in Bradford 266% and in Salford 258% in six months, the data has found, making these some of the hardest places to find a job.
In comparison, the best places to find a job include Cambridge, Manchester, Oxford, Winchester and Exeter.
Data from Wagestream, in comparison, found that Stroud had been hit worst with a 333% rise in jobseekers since before lockdown began.
Andrew Hunter, co-founder of Adzuna, said, “Unemployment has unfortunately reached record highs and has heavily impacted some regions in the UK a lot more than others. Northern cities are disproportionately impacted by job losses with all 9 out of 10 of the worst affected cities situated in the north of England. The disparity in job losses highlights a wider economic inequality with ‘middle-class’ cities such as Oxford and Cambridge comparatively unaffected. Our data shows that lower-income workers have been hit the hardest by job losses and we need to ensure that more is done to provide support to the groups of people that need support the most
“The situation is likely to get worse in the coming months as the government’s Job Retention Scheme winds up over the summer. There is a real risk that unemployment could double again by the end of the year, so getting Britain back to work in the coming weeks is critical to avoid long term economic damage.”
Peter Briffett, CEO and co-founder of Wagestream, commented, “We’ve all heard the warnings that the coronavirus pandemic threatens to tip the country into a once-in-a-century recession but it’s clear that financial stress has already started accelerating dramatically in some areas.
“The jump in JSA claims since before the UK shut down is staggering, but so is the variation in how different places are faring.
“The entertainment, leisure and retail industries have been hardest hit by the quarinting measures, with many businesses rendered virtually inactive over the past couple of months. The impact of this is going to fall disproportionately on those on low incomes and, with these types of businesses beginning to reopen as we head into July, the next month is going to be hotly watched for signs of how well households and the wider economy are going to be able to bounce back.”
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