October 2020

This briefing sets out analysis of ONS labour market statistics released on the morning of 13 October 2020. The data cover the number of people claiming benefits up to September 2020, and employment and unemployment figures for the period June to August 2020.

Stephen Evans, chief executive of Learning and Work Institute
The impact of the crisis is becoming clearer. Employment is down 482,000 since the start of the crisis, with revisions bringing it more in line with payroll data. Adding to the sense of a gathering storm, there are 3.5 million people out of work but wanting a job and redundancies rose by a record 114,000 last quarter. The partial reopening of the economy and the furlough scheme helped to support employment over the summer. But with around two million people still furloughed and economic restrictions tightening in many parts of the country, a long winter lies ahead. The Winter Economy Plan will help, but we need more ambitious support for jobs, incomes and retraining.
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Employment down 482,000 since start of crisis, with 3.5 million people now out of work and wanting a job

Employment is down 482,000 since the start of the crisis and fell by 153,000 on the quarter. Timelier HMRC payroll employment data have fallen by 670,000 since March but has stabilised at this lower level over the summer.

Figure 1: Employment fell at the start of the crisis, and has not recovered


However, the Coronavirus Job Retention Scheme has meant employment has fallen far less sharply than GDP. Its replacement with a less generous Job Support Scheme at a time when restrictions are being tightened brings risks and uncertainty.

There are now 3.5 million people who are out of work but would like a job. Figure 2 shows that unemployment rose only gradually, with sharper rises in the number of people who are inactive but want a job. The most recent data suggest a shift, with more people looking for work and fewer inactive but wanting a job (though still higher than pre-crisis).

Figure 2: The number of people out of work and wanting a job has risen



There was a partial recovery in activity over the summer as the economy started to reopen

Over the summer the gradual easing of lockdown, partial re-opening of the economy and the Eat Out To Help Out scheme meant some furloughed workers returning to their jobs. However, as figure 3 shows, the number of hours worked per week in June to August remained 15% below pre-crisis levels.

Figure 3: Hours worked per week has increased, but remains well below pre-crisis levels 


Similarly, job vacancies dropped to below half of the 2019 average following lockdown. ONS analysis suggests that it was this reduced hiring that led to falls in employment, rather than increased job loss. There has been a gradual increase as the lockdown has eased, but the number of vacancies at the start of October was just 61% of pre-crisis levels.

Figure 4: Vacancies are still 40% lower than before the crisis


Sharpest quarterly rise in redundancies on record, and likely to rise further

227,000 people were made redundant in the three months to August, reaching their highest levels since the last recession but still just 72% of that peak. Redundancy levels are likely to rise as the Coronavirus Job Retention Scheme is replaced by the less generous Job Support Scheme, at the same time as increased economic restrictions in some places affect businesses.

Figure 5: Redundancies are at their highest levels since the last recession


With around 2.5 million workers still on furlough, the end of the scheme risks triggering a second wave of unemployment

The Coronavirus Job Retention Scheme has limited the rise in unemployment by protecting jobs and incomes. However, the end of the scheme could lead to a larger spike in redundancies and a ‘second wave’ of unemployment.

HMRC data show that 4.8 million jobs were furloughed at the end of July, 3.5 million of which were fully furloughed. The latest Business Impact of Coronavirus survey showed that 9% of the workforce in surveyed employers were on partial or full furlough in the two weeks to 20 September. This equates to around 2.5 million employees.


Young people face a very challenging labour market

Young people face a double whammy of a disrupted education and tough labour market, and have been harder hit so far than many age groups.

Claimant unemployment for young people has increased rapidly since the start of the crisis. There are 529,400 18-24 year olds claiming unemployment-related benefits, up by 125% since March and the highest figure since September 1996.

The survey measure of unemployment for this age group has not been updated, but rose faster than for any other age group, up by 11.9% in the quarter since February to April, and now stands at 12.3% (up 1.6 percentage points).

The Government’s £2 billion Kickstart programme will begin in November and fund job opportunities for young people for six months. We think Kickstart should be part of an overall Youth Guarantee ensuring all young people are offered a job, training place or apprenticeship, with a focus on ensuring young people not on benefits don’t miss out.

Figure 6: Youth claimant unemployment has more than doubled

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Making sure Kickstart works

Our recent briefing paper warns that a focus on creating as many Kickstart jobs as possible must not come at the expense of quality training support or potentially excluding young people that need the most help.