UK employment in Q2 sees largest quarterly drop in decade

Marco Green
August 11, 2020

But economists say the full effect on employment will not be felt until the scheme ends in October.

Data showed about 33 million people were employed in Britain between April and June - an annual jump of 113,000, but a drop of 220,000 from the prior quarter.

In a warning of a potentially bigger rise in job losses, separate tax data for July showed the number of staff on company payrolls had fallen by 730,000 since March.

But the figures mask the true picture of job losses, as many employees were temporarily safeguarded under the United Kingdom government's furlough scheme that supported wage continuity.

"Unfortunately, the end of the furlough scheme will present a cliff-edge, statistically and economically, for those now relying on government support to make up their wages", he warned.

Chancellor of the Exchequer Rishi Sunak said of the report: "Today's labor market stats make it clear that our unprecedented support measures, including the furlough and self-employed support schemes, are working to safeguard millions of jobs and livelihoods that could otherwise have been lost".

"The trading environment is clearly a long way from returning to normal and we have to ensure our store costs are aligned with realistic expectations", the company said in a statement emailed to Euronews.

The unemployment rate unexpectedly held at 3.9%.

"Our forecast that the unemployment rate will peak at 7% in mid-2021 and remain above its pre-pandemic level of 4% until the end of 2022, suggests that the economic recovery will be slow going".

BoE Deputy Governor Dave Ramsden told The Times the central bank still had "significant headroom" to ramp up its huge bond-buying stimulus program again if needed.

The ONS is expected to announce on Wednesday that Britain's economy has fallen into a recession with a 21% slump in the size of the economy in the second quarter.

A large number of people are estimated to be temporarily away from work, including furloughed workers, approximately 7.5 million in June with over 3 million of these being away for three months or more, the ONS said. The number of employees rose - something the ONS said was partly accounted for by workers reclassifying themselves as employed.

The claimant count - which covers those claiming benefits for unemployment and because they are on low incomes - rose 116.8% to 2.7 million between March and July.

"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", he said.

Pay also suffered, with regular pay dropping by 0.2%, the first negative change since records began in 2001.

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

Other reports by Click Lancashire

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