Home Recruitment Nearly 700,000 less on payroll in August

Nearly 700,000 less on payroll in August


The official UK unemployment rate rose to 4.1 per cent in the three months to July, up 0.2 percentage points from the previous quarter. However, with five million people still temporarily away from work (including furloughed workers), the official rate does not currently provide a clear picture of the state of the labour market, as it is being kept artificially low.

Of more interest during the pandemic has been data from HM Revenue & Customs that indicates the number of people who have left their employers’ payrolls – a loose measure of the number of redundancies – and in August that figure was down around 695,000 compared with March, according to data published by the Office for National Statistics (ONS) on Tuesday.

The figures suggest that hiring activity as lockdown measures have been eased has not done enough to offset redundancies. Despite this, the official employment rate rose to 76.5 per cent between May and July, up 0.1 percentage points on the quarter and 0.4 percentage points higher than the same period in 2019. The rate of economy inactivity, which measures the number of people who are out of work but not actively seeking a job, also fell.

Young people aged between 18 and 24, who are disproportionately more likely to work in sectors of the economy hit hardest during lockdown such as hospitality and the arts, saw a record drop in employment of 146,000.

Figures for the period to July will not include job losses that have occurred since employers have had to begin contributing to their furlough payments from the start of August. Economists believe the situation will have worsened significantly this month. The Institute for Employment Studies (IES), a consultancy, has warned that covid redundancies will exceed anything seen “in at least a generation”.

The IES obtained data via a freedom of information request that revealed that employers notified the government of nearly 380,000 staff at risk of redundancy between May and July.

Tony Wilson, director of the IES, said the data “[laid] bare the scale of the jobs crisis” the UK was facing in the coming months. He added it was a “sad reality” that redundancies could not be avoided entirely, but employers and the government could do more to minimise job losses.

“Our top priority must be to support those facing the prospect of losing their jobs to find new, secure and good-quality work as quickly as possible,” he said. “At the same time, we are in the midst now of a significant recession, and we need urgent action to support employment demand.”

Paul Dales of consultancy Capital Economics told the Financial Times: “It’s encouraging that the first step in unwinding the furlough scheme has not led to a surge in job losses, but we think it is only a matter of time before that happens.”

“All the evidence is pointing to a mounting jobs crisis across Britain,” said Nye Cominetti, a senior economist at the Resolution Foundation. “The reopening of the economy this summer after lockdown may have boosted economic activity, but it has not spurred a recovery in the jobs market”.

Chancelllor of the exchequer Rishi Sunak said of the unemployment figures: “This is a difficult time for many as the pandemic continues to have a profound impact on people’s jobs and livelihoods. That’s why protecting jobs and helping people back into work continues to be my number one priority.”

15th September 2020.