UK employment falls by biggest quarterly amount since 2009

LONDON (AP) — The number of people in employment in the United Kingdom (UK) fell by 220,000 in the three months after the country was put into lockdown as a result of the coronavirus pandemic, official figures showed yesterday.

That quarterly decline, which took the total number of people in employment to 32.92 million, is the biggest since the deep recession in 2009 in the wake of the global financial crisis.

The statistics agency also said that the number of people on payroll in the UK fell by a further 81,000 in July, taking the total decline since the start of the pandemic in March to 730,000.

The update continues recent trends, with falls in employment accompanied by significantly reduced hours of work. The falls in employment are greatest among the youngest and oldest workers, along with those in lower-skilled jobs.

While the number of people on payroll has fallen to 28.27 million since the start of the pandemic, the country’s official unemployment rate is not rising, holding steady in June at 3.9 per cent. To be counted among the unemployed, workers need to be actively looking for a new job, which many have decided not to do yet. Britain has been partly spared the sharp rises in unemployment seen in the United States (US), for example, because of the government’s Coronavirus Job Retention Scheme, which pays the majority of the salaries of workers who have not been fired. Some 1.2 million employers have taken advantage of the programme to furlough 9.6 million people at a cost to the government of GBP33.8 billion (USD44 billion).

Though these workers have not been working over the past few months, they are not counted as unemployed.

But the government is phasing the programme out and will bring it to an end in October, arguing that it gives “false hope” to furloughed workers while at the same time limiting their prospects of getting new jobs as their skills fade. Instead, the government is pinning its hopes on the re-opening of the economy and that there is no second coronavirus spike.

“A wide range of indicators suggest that job losses will crystallise from August, when employers must start to cover some of the costs of furloughed staff,” said Chief UK Economist at Pantheon Macroeconomics Samuel Tombs.

He noted that surveys of employment intentions are “at least as weak” as they were at the worst point of the global financial crisis in 2008-9.