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UK’s job crisis just beginning

By Dawn Gibson

The biggest quarterly plunge in employment since the depths of the financial crisis is just the start of the UK’s job woes.

Figures released by the Office for National Statistics show the number of people on company payrolls fell by around 730,000 between March and July as lockdown took effect, the largest fall in just over a decade.

However, an official unemployment rate of 3.9% masks the thousands of people who were prevented from looking for work or were unwilling to during lockdown – people recorded as ‘inactive’ rose by 383,000 from March to July.

More significantly, there were 7.5 million people who were temporarily absent from their jobs in June. When the government-funded furlough ends in October, there is expected to be a huge spike in redundancies.

Young people hardest hit

Tony Wilson, director of the Institute for Employment Studies, said there were worrying signs that younger people were being particularly hard hit, with almost one in seven now claiming unemployment benefits, up from fewer than one in fifteen before the pandemic. “This is a faster increase than for any other age group, with young people facing a double whammy from both job losses and falls in hiring,” he said.

“Meanwhile in 20 local areas, more than one in 11 residents are on the claimant count – with this dominated by inner cities (particularly in London), ex-industrial areas and coastal towns.  Many of these areas also had the highest levels of worklessness and faced the most significant disadvantages before the crisis began.

“The one bright spot in today’s figures is that the fall in vacancies appears to have bottomed out, with a significant and somewhat surprising bounce-back in notified vacancies in the single-month estimate for July.  

“Looking ahead, it’s likely that in the next few months we’ll start to see unemployment rising as more of those out of work start looking for new jobs, as well as likely increases in redundancies as the various support schemes start to unwind.  It’s imperative then that the government starts to put in place the measures announced last month in its plan for jobs – particularly the new Kickstart scheme for young people and the big expansions of support available through Jobcentre Plus and employment services. However, even with these measures, it looks likely that we may yet need more in the autumn spending review to support hiring and new job growth.”

Nexus Global: most and least confident sectors

The release of the ONS data coincides with a Business Confidence Report from Nexus Global examining which industries are most – and least – confident about hiring new staff. The science and pharmaceuticals industries topped the list of most confident, followed by law, finance, automotive, recruitment and HR, healthcare and insurance.

The industries least confident about taking on more people are leisure/sport, travel, creative arts and design, and hospitality.

The survey was conducted with 500 senior managers between May and June from all sectors and regions in the UK.

Meanwhile, some commentators are seeing the latest unemployment data as a further sign that the UK labour market has changed permanently as a result of the pandemic.

The rise and rise of flexible working

Louise Deverell-Smith, founder of Daisy Chain, an online recruitment platform matching parents with flexible job roles, said many UK businesses had already shown great creativity, flexibility and extraordinary resilience to overcome turbulent months.

“One undeniable fact is that remote and flexible working arrangements have helped to prevent further job losses and could also be a lifeline when rebuilding the economy,” she said. “Daisy Chain saw employer sign-ups triple in June, and the increase in flexible roles being posted continued through July. It demonstrates a clear shift in approach to working arrangements from employers.

“The pandemic has shown that many 9-5, Monday-Friday office roles could be a thing of the past. Many jobs can and are being done remotely, part time, or with compressed hours, alleviating some of the pressure on certain sectors and creating more job opportunities for others. Jobs and the economy are going to look a lot different in 12 months’ time.”

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