Young and poor hit worst as lay-offs rise by 650,000
NEARLY 650,000 jobs were axed between March and June with the young and poorly paid bearing the brunt of what is likely to be just the tip of an unemployment iceberg.
That leaves the number of people claiming work-related benefits at 2.6 million, with official forecasts warning that could rise to 4 million.
While the headline jobs data from the Office for National Statistics was steady, economists say it masks a grim picture.
The overall unemployment rate is 3.9%, and there are nearly 33 million people in work, a 76.5% employment rate. But with nine million people on the furlough scheme that will be phased out from August, the statistics are unlikely to look benign for long.
Hours worked have fallen by 16.7%, vacancies are at a record low and pay is falling, especially among the young.
ING said in a note: “Assuming the rise in unemployment is initially concentrated among previously furloughed workers, then it’s likely to disproportionately affect younger, lower-paid employees from poorer parts of the UK.”
The young and the poorly paid typically work in retail and hospitality, two sectors of the economy hit hardest by the Covid lockdown. Jack Izzard, director of The Great British Bounce Back, a community of small businesses, said: “The core of the UK’s jobs reactor hasn’t exploded yet due to the furlough scheme but this latest data suggests it is only a matter of time. With each day that passes, more businesses are failing or having to make significant job cuts to remain afloat, so this already grim data looks set to get even worse.”
Samuel Tombs from Pantheon Macroeconomics said a “brutal period of lay-offs” is under way.
“The unemployment rate will surge over the coming months as people re-engage with the labour market. Their chances of finding a new job look slim.”
In London the claimant count rate of unemployment remained at 7.5% — higher than any other region in the country at 460,000. The rate for men was 8.2% compared with 8.1% in May and for women was 6.8%, up from 6.7% before.
James Reed, chairman of the Reed employment group, said: “Even with the Government’s recently announced measures to support ‘jobs jobs jobs’, the labour market is on a knife edge. The risk of mass unemployment remains high.”
Separate data from the ONS shows a 185% rise in London benefit claims during lockdown. The number of Londoners claiming unemployment related benefits rose from 173,800 last year to 494,800 in May.
In a speech to the CBI today Mayor of London Sadiq Khan said “Ministers were clearly too slow to act on the health consequences of Covid-19. We simply can’t afford for the Government to be too slow to act on the huge economic consequences as well.”