A wave of redundancies looks about to break
The most obvious thing to say about the latest, grim snapshot of the labour market is that it is remarkable that it isn’t worse. The UK has been abruptly hit by a recession of extraordinary scale. Since lockdown was imposed in March, 649,000 people have disappeared from company payrolls, the number of people who are self-employed has declined by 178,000, the number claiming benefits (either because they have lost their job or because they need help to support a drop in earnings) has risen by more than a million.
But the official rate of unemployment remains a healthy-looking 3.9%. The number flatters to deceive.
We are still in the foothills of something extremely serious and the data the Office for National Statistics (ONS) has published is running at least a month, and in some cases two months, behind where the economy is now.
It doesn’t, for example, capture the tens of thousands of redundancies which have been publicly announced in recent weeks by airports, retailers and restaurants. The ONS numbers do illustrate, once again, how effective government support has been in cushioning workers and business from the economic shock of Covid-19.
Thus far it’s been the difference between dismal and disastrous. 9.4 million jobs have been protectively furloughed, at great cost to the taxpayer.
There’s no way of knowing how many of these jobs would otherwise been lost but a glance across the Atlantic to the US (where no such scheme exists) suggests the level of redundancies would have been extremely heavy. From next month furlough support will be gradually withdrawn.
Surveys suggest that large numbers of businesses can’t afford to take workers back.
Earlier this week, the Office for Budget Responsibility calculated that between 10% and 20% of furloughed workers are likely to end up unemployed. For anyone out of work the chances of finding a new job look poor.
Vacancies are at record low levels.
There were 333,000 openings in June, down from 795,000 in February. Competition will be ferocious. The recovery has begun but unless it miraculously finds a significantly higher gear all the evidence points to large numbers of job losses in the months to come.