Daily Outlook

More than 600,000 lose work in UK as COVID hits jobs market

The number of people on British company payrolls fell by more than 600,000 in April and May as the coronavirus lockdown hit the labour market, and vacancies plunged by the most on record, official data showed on Tuesday.

The jobless rate unexpectedly held at 3.9% over the three months to April – despite a record slump in overall economic output during that period – as firms turned to the government’s job retention scheme to keep employees on their books. Economists polled by Reuters had mostly expected a rise in the unemployment rate to 4.7%.

The furlough scheme is due to run until the end of October although employers have to make contributions to the cost of paying their temporarily laid-off workers from August.

Many companies have already announced permanent layoffs of workers. On Monday, building materials firm Travis Perkins said it would cut about 9% of its workforce, or 2,500 jobs. Airlines have shed more than 15,000 jobs in Britain.

Britain’s job market was strong before the coronavirus hit, and the ONS said many of those who lost their jobs in April were not actively looking for work and so counted as ‘inactive’ rather than unemployed.

In a more up-to-date sign of how the coronavirus lockdown is affecting the labour market, experimental figures, based on tax data, showed the number of people on company payrolls fell by 612,000 in April and May. In May alone, it was 163,000 lower than in April when the biggest job losses occurred.

That left the number of paid employees 2.1% lower than in March, the ONS said. There was also a big drop in job vacancies which showed their largest quarterly fall since the ONS began measuring them in 2001, with a slide of 342,000 to 476,000.

Prime Minister Boris Johnson, under pressure to ease the slump in the economy, has ordered a review of Britain’s two-metre social distancing rule which many employers say is stopping them from getting back up to speed.

Johnson and finance minister Rishi Sunak are also reportedly considering increasing a tax incentive for small firms to hire workers, and suspending social security payments by employers.

More than 600,000 lose work in UK as COVID hits jobs market, Reuters, Jun 16

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