Our quick analysis of the ONS labour market statistics, released on the morning of 16 June 2020. The data covers the number of people claiming benefits up to May 2020, and the employment figures for the period February – April 2020.
The number of people claiming unemployment benefits increased by 1,561,600 between March and May 2020, a rise of 4.3 percentage points. This is the largest annual increase since records began in 1922. The claimant count is now 2.8 million the highest since the early 1990s.
Despite the easing of the lockdown, unemployment is likely to increase further in the coming months. At least some of the 8.9 million furloughed workers will be unable to return to their previous jobs when the scheme is withdrawn at the end of October.
L&W modelling suggests the unemployment rate is likely to exceed 10% this year, and risks rising to its highest levels since 1938 in the wake of the Great Depression.
Figure 1: Claimant count has increased to levels last seen in the early 1990s
The number of people in employment has seen the largest fall on record, but the pace of decline is slowing.
ONS data show the number of people in employment fell in April by 318,000. More up to date data from HMRC suggest employment fell by 163,000 in May, following a 449,000 fall in April, but with the rate of decline slowing compared to last month. On this measure, employment is 600,000 lower than in March. These are record employment falls.
The decline in employment would have been far larger still had the Coronavirus Job Retention Scheme not been in place. The 8.9 million furloughed workers count as employed in these data.
Total hours worked have fallen by 260 million since March, equivalent to 740,000 full-time workers. This is the biggest two month fall on record.
Figure 2 – Employment has seen the largest fall on record
There has been a sharp increase in youth unemployment. The number of young people aged 18 – 24 claiming unemployment benefits more than doubled between March and May, rising from 238,100 to 498,300 (a 109% rise).
This is a particular concern, given the long term ‘scarring’ impact it can have on young peoples’ employment and earnings prospects. We risk the emergence of a ‘pandemic generation’ affected by both disrupted education and poorer labour market prospects.
L&W has called for a Youth Guarantee, so that all young people can access a job, an apprenticeship or a training opportunity.
Figure 3: Youth claimant count has more than doubled in two months
The coronavirus crisis has had an uneven impact across the UK, and it risks deepening pre-existing regional inequalities.
As figure 4 below shows, areas with higher levels of unemployment going into the crisis have seen more jobs lost as a result of the crisis. The increase in the claimant count has been largest in London, and the North West with particularly sharp increases in unemployment in the London Borough of Haringey (6.3 percentage points), and Blackpool (5.1 percentage points).
This represents a threat to the government agenda of ‘levelling up’ prosperity across the country.
Figure 4: Increase in claimant count by local authority ranked by pre-crisis unemployment
L&W has called for a ‘Plan for Jobs’ to reverse the unprecedented rise in unemployment and help get Britain back to work. This should include: