UK unemployment rising ‘faster than Great Depression’

LONDON (AP) — The number of people in the United Kingdom (UK) claiming job-related benefits increased by a monthly 23.3 per cent in May to 2.8 million, according to official figures released yesterday that likely underestimate the heavy toll on the labour market of the coronavirus lockdown.

The Office for National Statistics said the so-called claimant count – which includes both people who work on reduced income or hours and those who are actually unemployed – was 125.9 per cent higher than in March, the month when lockdown restrictions were imposed.

The statistics agency also said the number of people on payroll fell by 2.1 per cent, or 612,000, between March and May.

“If the public health crisis is just starting to ease, today’s figures show that the unemployment crisis is only just beginning,” said Director Tony Wilson at the Institute for Employment Studies.

Wilson said that unemployment is rising faster than during the Great Depression in the 1930s and is set to top three million this summer.

People walk with bags after shopping at the Selfridges department store in London on June 15. After three months of being closed under coronavirus restrictions, shops selling fashion, toys and other non-essential goods are being allowed to reopen across England for the first time since the country went into lockdown in March. PHOTO: AP

The actual spike in unemployment would have been much higher were it not for the British government’s Job Retention Scheme, which has been paying a big part of the salaries of more than nine million people.

Many companies have held off from cutting jobs during the lockdown as a result of the scheme, under which the government pays up to 80 per cent of the salaries of workers retained, up to GBP2,500 a month.

Treasury chief Rishi Sunak has said that from August, firms will have to start making contributions to the salaries of workers that are retained but not working, and that the scheme will close two months later.

That’s raised concerns that Britain will see a huge spike in the official unemployment rate, which stood at 3.9 per cent in April. Government figures released yesterday showed that 9.1 million jobs have been furloughed under the scheme by 1.1 million employers at a cost to the government of GBP20.8 billion.

Some of those furloughed workers will have returned to their jobs on Monday, as a result of the reopening of nonessential shops in England for the first time in nearly three months.

It’s clear that not everyone will be able to sidle back into their jobs given that many firms are likely to go bust as a result of the lockdown. Figures last week showed the British economy shrank by a massive 20 per cent in April alone.