April 2020

The latest labour market figures published on 21 April indicate that the UK labour market was in a robust state as it headed into the coronavirus pandemic. However, the current situation will be dramatically different as will be the likely future state of the labour market.

  • Unemployment was 1,364,000, and was up by 21,000 from last month’s published figure (quarterly headline increased by 58,000) and the unemployment rate 4%, has risen by 0.1 percentage points on last month and rose by 0.2 percentage points on last quarter.
  • The ONS figure for claimant unemployed was 1,246,850, up by 12,100 on last month, and the claimant rate was 3.5%.
  • The number of workless young people (not in employment, full-time education or training) was 1,001,000, and has risen by 20,000 on the quarter, representing 14.5% of the youth population (increased by 0.3 percentage points).
  • Youth unemployment (including students) was 513,000, and rose by 32,000 on the quarter.
  • There are 1.7 unemployed people per vacancy.
  • The employment rate was 76.6% and was up by 0.1 percentage points on last month’s published figure and was up by 0.2 percentage points in the preferred quarterly measure.
View analysis for April 2020
Duncan Melville, chief economist at Learning and Work Institute
The numbers for employment, unemployment and economic inactivity released today all relate to the three months, December 2019 to February 2020, prior to the onset of the coronavirus pandemic and the associated ‘lockdown’ measures put in place by the Government.
These numbers show a large rise in employment. This was combined with a rise in unemployment with economic inactivity falling very substantially as the robust state of the labour market encouraged individuals to enter the labour market and find work. The current state of the labour market will be very different. Our own research suggests that around five years of employment growth were wiped out in the first month of the crisis, and that the unemployment rate had reached 6% by the end of March compared to the 4% reported today by the ONS. The three-month January to March 2020 figures for vacancies released today by ONS, show some of the impact of the pandemic as they are down after three months of rises. The single month vacancy numbers for March show an impact even more strongly with total vacancies down by 10 percent compared to March 2019. Accommodation and hospitality, one of the sectors most affected by the lockdown measures, showed an annual fall in vacancy levels of 30 percent. Research by the Institute for Employment Studies estimates that job vacancies fell by 42 percent between mid-March and mid-April 2020. Unemployment is likely to rise further. The Office for Budget Responsibility (OBR) released an economic scenario last week which suggests that economic output could fall by 35 percent in the second quarter of this year with unemployment rising to 10 percent or 3.4 million in the quarter. This scenario assumes a three-month lockdown followed by three months when the lockdown measures are partially lifted. The scenario assumes a very rapid economic bounce back with GDP regaining its pre-outbreak level by the end of this year. As a consequence, the OBR envisage the unemployment rate falling rapidly to 7.0 percent by the end of this year and 5.5 percent by the end of 2021. The consensus amongst independent economic forecasters is very similar on unemployment to this OBR scenario. The average of new forecasts released this month projected the unemployment rate at 6.9 percent at the end of 2020 and 5.5 percent at the end of 2021. The Resolution Foundation released its own set of economic scenarios last week based on the lockdown lasting three, six or twelve months. The results of the three-month scenario are similar to the OBR, but the six and twelve month scenarios show unemployment averaging almost 5 million (14.1 percent) and over 7 million (20.8 percent) in 2021 respectively. In my view the rapid bounce back in the economy and unemployment levels, envisaged in the OBR scenario is overly optimistic. The history of economic recessions is one of prolonged reductions in economic activity not the rapid rebound assumed by the OBR. Furthermore, the recovery in unemployment levels is likely to lag that of output. The initial needs of rising production are likely to be met by formerly furloughed workers and not by hiring unemployed people. The Great Recession of 2008-09 engendered a much lower rise in unemployment than had been expected on the basis of previous UK recessions. However, even in this case it took over seven years for the unemployment rate to return to its pre-crisis levels. The OBR scenario envisages this happening in three to four years. A protracted period of high unemployment for the next few years is likely. This requires an ambitious policy response that addresses the five major challenges we identified in our recent report ; avoiding a ‘pandemic generation’ of young people with poorer education and employment prospects, utilising the skills and expertise of those out of work or furloughed, preventing short-term unemployment turning into long term unemployment, planning for how to safely withdraw the temporary supports the government has introduced, and learning the lessons from this crisis for the future.
Paul Bivand, associate director for statistics and analysis at Learning and Work Institute
All these figures, including the March claimant count data, relate to the period before the shutdown. The claimant count is up to 12 March. The vacancy figures do include returns for the whole of March, so are beginning to show some effect. Users should note for the future that workers who are on furlough will be counted as in employment, on the same basis as those on maternity and paternity leave, as they have a job that they are not currently doing work in.

Chart 1: UK unemployment (ILO)

The latest unemployment figure was 1,364,000. It has risen by 21,000 from the figure published last month. The unemployment rate rose by 0.1 percentage points to 4%.


Chart 6: Young people not in employment, full-time education or training

The number of out of work young people who are not in full-time education (1,001,000) has risen in the past quarter by 20,000, or 2.1%. The rise was both among the inactive and the unemployed, being slightly faster for the unemployed.


Chart 8: Jobseeker’s Allowance and Universal Credit claimant count

The ONS headline Jobseeker’s Allowance and Universal Credit claimant count has risen by 12,100 to 12 March, taking the total to 1,246,850. ONS’s claimant count before seasonal adjustment rose by 20,020 to 1,277,300. This change was directly comparable to the local level claimant count changes published today.


Chart 17: Inactivity rate quarterly change in regions – December 2019 to February 2020

Overall, there was a 0.3 percentage point fall in the inactivity rate. Four regions showed rises in inactivity, led by the North West and Wales.