'Labour market on red alert'

The latest unemployment figures published today (June 16) show how deeply the coronavirus pandemic has hit the labour market, with the number of workers on UK payrolls plummeting by more than 600,000 between March and May.

The data from the Office for National Statistics (ONS) also found that the number of people claiming work-related benefits, which includes those not in work, has skyrocketed by 126 per cent to 2.1m people.

The number of claims for work benefits since March has risen at a faster rate than during the Great Depression in 1929, according to the Institute for Employment Studies (IES) think tank.

Still, the headline unemployment rate stood steady at just 3.9 per cent in the three months to April, but analysts have said that this highlights the ‘cushioning effect’ of the government’s job retention scheme where the state covers 80 per cent of wages for people who are furloughed.

The true scale of job losses amid the coronavirus crisis will not be clear until October, when the furlough scheme is set to end. There are currently more than 9m people on the government’s furlough scheme.

The most striking finding in the latest figures is the drop in the number of hours worked, the ONS said, with total weekly hours worked in the three months to April dropping by 94.2m – a 9 per cent decline from the same period last year.

Pay has also suffered significantly amid the pandemic – with pay including bonuses in the three months to April falling for the first time since January 2018, down by 0.4 per cent after inflation.

Industries which had the largest take-up of the furlough scheme – and are often among the lowest-paid anyway – such as food and accommodation services saw the biggest falls in pay.

The latest ONS data comes as the TUC has published an analysis showing young people are set to be hit hardest by the coronavirus crisis as unemployment surges.

The analysis found that of the 4,352,000 UK workers aged 25 and under, 890,000 work in either accommodation and food, or arts, entertainment and recreation – two sectors that have suffered among the biggest impacts amid the lockdown.

The means that 20 per cent of workers aged 25 and under work in these two sectors, compared to 6 per cent for workers older than 25.  Workers aged 25 and under are therefore three times more likely to work in one of the two sectors where jobs are at greatest risk, the TUC noted.

Commenting on the latest ONS figures, TUC general secretary Frances O’Grady said, “The labour market is on red alert.

“We need strong action now to stop lasting economic damage. The government must work closely with unions and business at national and industry level to get the next steps right,” she added. “The plan for recovery has to prioritise protecting and creating jobs. Getting people back into work is the only way out of recession.

“That’s why we need a job guarantee scheme to help those who lose work, especially young workers.”

Unite assistant general secretary Steve Turner reiterated the call for tailored government support of sectors across the economy.

“We dread to think what will happen when furlough tapers off so we cannot understand the delay on the support for sectors supporting the jobs of millions of people like auto manufacturing and aerospace,” he said.

“Across the Channel, the French and German governments are pressing on with investment and support for economically key sectors, securing jobs and skills, boosting confidence and making them attractive places to base a business,” he added. “We urgently need the UK government to provide the same level of support for and faith in UK workers or the jobs loss tsunami we fear will sweep through our towns and communities this summer.”

Hajera Blagg