The number of employees on UK payrolls was 730,000 lower in July than in March, a 2.5% drop that was largely due to the hiring freeze by companies, according to figures from the Office for National Statistics based on tax data.
A much larger number of workers are now at risk of falling into unemployment as the government is gradually ending its job maintenance program put in place at the start of the Covid-19 crisis.
Jonathan Athow, deputy national statistician at the ONS, said that up to 5 million employees still appeared to be on leave in June, with young and old workers and those in lower-skilled jobs most likely to ‘be part of it. In addition, around 300,000 employees had told the ONS that they were temporarily off work without receiving a salary.
“Of real concern is that this is just the first wave of bad news for the job market,” said Gerwyn Davies, economist at the CIPD organization for human resources professionals. Ruth Gregory, of the consultancy firm Capital Economics, said: “This is just the lull before the storm”.
Despite the huge shock to the labor market caused by the pandemic, the main employment and unemployment measures have remained virtually unchanged since March, due to the wide coverage of the leave program, and also because many of those who lost their jobs did not actively seek work. .
Rishi Sunak, the Chancellor, said the figures “clearly show that our support measures are unprecedented. . . work to save millions of jobs and livelihoods ”.
The number of people claiming unemployment benefits continued to rise in July, reaching 2.7 million – 7.5 percent of the workforce, and more than double the level before the pandemic. However, this number includes, among others, some people who still work with low wages.
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While layoffs increased in the second quarter, they are still below levels seen after the 2008 financial crisis.
But many companies have been planning layoffs since the beginning of July, before the gradual reduction in the job retention program began. Since that month, employers have had to contribute to the cost of workers on leave and the program is expected to end in October.
Debenhams, the department store group, on Tuesday announced 2,500 job cuts, in addition to the 4,000 already planned. It followed the cuts announced last week by restaurant chain PizzaExpress and electronics retailer Dixons Carphone.
Although hiring resumed between June and July, with pubs and restaurants reopening, the ONS said the number of vacancies remained 45% lower than a year earlier, leaving more people to looking for each job.
“People who lose their jobs and new entrants to the workforce will have a hard time finding work,” said Samuel Tombs, of consultancy Pantheon Macroeconomics.
Evidence of growing job losses has prompted ministers and other policymakers to do more to prevent mass unemployment.
Dave Ramsden, Deputy Governor of the Bank of England, told The Times this week that the central bank will step up its asset purchase program if necessary to support the recovery, adding that an important factor in the committee’s decisions monetary policy would increase unemployment.
“Unemployment peaks [in the BoE’s forecast] at 7.5%, but the risks are that it will be higher than that, ”he said.
However, Mr Sunak has so far resisted pressure from political opponents and business leaders to extend the holiday program beyond the end of October, at least for parts of the economy that were still fully or partially closed due to Covid-19.
Mr Sunak’s allies have insisted the Chancellor is not planning an extended leave behind the scenes. “We are looking to make sure that people can find their way to new jobs, if necessary,” one said.
But veterans of the Treasury believe he may have to change his mind. Alistair Darling, Labor Chancellor during the 2008 financial crash, said: “He has to do something about it.
“It’s great to say that people have to ‘move on’ if you’re not the person on the move. For many people, they will go straight to the claims queue. ”
Mr. Sunak insists that the government is now focusing on training, skills and promoting new jobs.
“I’ve always been clear that we can’t protect all jobs, but. . . we have a clear plan to protect, support and create jobs to ensure that no one is left without hope, ”he said on Tuesday.
But even if the holiday program ends as planned in October, the pressure for more government measures to support employment in the fall will be intense.
Jonathan Reynolds, shadow work and pensions secretary, said Labor supported a targeted extension of the leave program for the most vulnerable industries.
“These figures confirm what we feared: Britain is in the midst of a jobs crisis,” he added.
Business groups are calling for targeted cuts in employer contributions to national insurance to boost hiring – a move the Treasury is likely to resist as it could funnel large sums of money to support creation jobs that would have happened anyway.
Neil Carberry, chairman of the Confederation of Recruitment and Employment, a professional body, said the government must “act urgently” to ensure that programs to help newly unemployed retrain and find jobs. a job are operational in the fall.