United Kingdom suffers heavy job losses amid pandemic

Andrew Cummings
August 11, 2020

LONDON, Aug 11 (Reuters) - The number of people in work in Britain has suffered the biggest drop since 2009 and signs are growing that the coronavirus will take a heavier toll on the labor market as the government winds down its huge job-protection scheme.

"Figures from our main survey show there has been a rise in people without a job and not looking for one, though wanting to work".

The unemployment rate unexpectedly held at 3.9%.

According to the Office for National Statistics (ONS), around 730,000 jobs have been lost since the coronavirus lockdown started in March.

Furthermore, around 300,000 people said in June that they were employed although they were away from work and receiving no pay which also helped keep the unemployment rate down, the ONS said.


But the Shadow Work and Pensions Secretary Jonathan Reynolds called it "extremely worrying" that older workers, the self-employed and part-time workers have borne the brunt of joblessness.

Analysts have warned that unemployment will continue to surge when the government's job retention scheme, which pays 80 percent of workers' salary up to 2,500 pounds (3,268 USA dollars) a month to those furloughed, winds up in October. Excluding bonuses, pay fell for the first time since records began in 2001. Last week, the Bank of England forecast the jobless rate would hit 7.5% at the end of this year. British Finance Minister Rishi Sunak said the figures showed the government support programs were working, but he warned that job losses were inevitable.

"In addition, there are still a large number of people who say they are working no hours and getting zero pay".

Philip Shaw at Investec said: "We are forecasting a monthly increase of 8.1% as more of the economy, such as "non-essential" retailing, opened up in mid-June".

The state has been paying up to 80% of wages for nearly 10 million workers under its furlough scheme, who are not classified as unemployed.


Experts are anxious that the full extent of Britain's jobs problems has been hidden by the Government's furlough scheme, which promised to cover 80% of the salaries of staff who could not work because of lockdown.

"Vacancies numbers began to recover in July, especially in small businesses and sectors such as hospitality, but demand for workers remains depressed", he added.

The worst of the job losses came in the beginning of the lockdown months.

Universal credit claims are up by an unprecedented 117% since March, hitting 2.7 million in July 2020, and while some of those claimants remain in work, this is typically an early warning signal for an impending rise in unemployment. To be counted among the unemployed, workers need to be actively looking for a new job, which many have decided not to do yet, the ONS said.

The real question now is how many of those temporary absences become permanent, as the furlough scheme comes to an end and the United Kingdom economy adjusts to the "new normal", whatever that is.


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