The number of people employed in the U.K. fell by 220,000 in the three months to June, the steepest quarterly decline since May to July 2009, the Office for National Statistics (ONS) said Tuesday.
While the unemployment rate was unchanged at 3.9 percent, that figure reflected the fact that many people who were out of work had given up looking for jobs and therefore weren’t counted in the stats, the ONS said.
The ONS noted that a large number of people are estimated to be temporarily away from work as a result of the coronavirus pandemic, including furloughed workers — approximately 7.5 million in June 2020, with over 3 million of them not working for three months or more. The ONS said it estimated around 300,000 of the people who weren’t working because of the pandemic had received no pay in June.
Early indicators for July also paint a grim picture, suggesting the number of employees on payrolls in the U.K. fell 2.5 percent — around 730,000 — compared with March 2020, according to the stats office.
The number of hours worked also continued to fall, reaching record lows both on the year and on the quarter, the ONS said, with the number of people on zero-hours contracts increasing.
“New analysis shows that the youngest workers, oldest workers and those in manual or elementary occupations were those most likely to be temporarily away from paid work” during the pandemic, the ONS said.
In more bad news, workers’ pay saw “strong” falls in the three months to June 2020, the ONS said. Total nominal pay fell by 1.2 percent on the year and regular nominal pay fell by 0.2 percent — the first negative pay growth in regular nominal earnings since records began in 2001.
There was a glimmer of good news, with the ONS saying job vacancies were up 10 percent April to June, largely driven by smaller businesses taking on additional staff to meet coronavirus guidelines.
However, the unemployment statistics increase pressure on Chancellor Rishi Sunak to reverse his policy of ending the furlough scheme in October, with some in civil society, the financial sector and the parliamentary opposition calling for targeted support aimed at the leisure and hospitality sector.
As of August 2, some 9.6 million workers had been furloughed at some point since the launch of the job support program, costing the Treasury £33.8 billion, according to the British tax office, HM Revenue & Customs.
“These figures confirm what we feared — Britain is in the midst of a jobs crisis,” said Jonathan Reynolds MP, the Labour Party’s shadow work and pensions secretary. “The government must wake up to the scale of this crisis, and put an end to this jobs crisis and adopt a more flexible approach targeted at the sectors who need it most.”
Employees are likely to suffer more in August, as companies come under the obligation to make contributions toward furlough paychecks, and the number of advertised openings not being high enough to absorb planned redundancies, said Nye Cominetti, senior economist at the Resolution Foundation, a think tank.
“The government needs to heed these early indicators and extend support to those sectors and workers that are going to be hit hardest by the economic fallout of this crisis,” Cominetti said.
HSBC economist Elizabeth Martins said in a note to clients, seen by POLITICO, that “unfortunately there is likely worse to come” and “more jobs will likely go” — leading also to loss of pay growth for those who remain in work. “As the numbers start to stack up, the Chancellor might have to look at extending some of the support currently available to businesses, including, perhaps, a reinvented version of the Job Retention Scheme,” said Martins.
But Sunak pushed back, saying in an emailed statement to journalists: “Today’s labour market stats make it clear that our unprecedented support measures, including the furlough and self-employed support schemes, are working to safeguard millions of jobs and livelihoods that could otherwise have been lost.
“I’ve always been clear that we can’t protect every job, but through our Plan for Jobs we have a clear plan to protect, support and create jobs to ensure that nobody is left without hope.”
He pointed to his restaurant subsidy scheme, which was used over 10 million times since launch on August 3, as a form of support tailored for hospitality workers.