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UK employment sees biggest crash in a decade

The picture is bleak for the UK's job market, but figures show the Government's furlough scheme – set to end in the coming months – has protected thousands from unemployment. Our Ride Out Recession Alliance wants to go further
EPA/Andy Rain

As many as 730,000 jobs have been lost since March, new figures show, as the Covid-19 crisis continues to hit the UK labour market with force.

Office for National Statistics (OFS) analysis showed that younger (18-24) and older (65+) workers, plus those in manual occupations, were worst affected by job cuts and diminishing vacancies.

Also driven by losses for self-employed and part-time workers, it was the biggest drop in employment since the financial crisis in 2009. The figures do not include furloughed or zero-hours contract workers.

The data showed that decreasing employment in May, June and July was mostly down to fewer people moving into employment, with many out of work but not looking for a job – meaning the figures do not actually show a rise in unemployment, but a drop in the number of people on payrolls across the country.

This is of concern because sustained time away from the world of work could make it harder for people to eventually get back into jobs, the OFS said.

But researchers found an estimated 10 per cent increase in vacancies across the UK between April and July, to roughly 370,000 – driven mostly by smaller businesses taking on more staff to operate in accordance with Covid-19 safety measures.

The number of hours being worked also hit a record low this year, and then again this quarter, meaning even those still in work are at risk of falling into poverty.

Zero-hours contracts were found to be on the rise, hitting the highest number on record by soaring 156,000 to 1.05 million. This is thought to be contributing to a loss in hours for young workers who are more likely to be on contracts which don’t guarantee them a set number of hours’ work. Meanwhile, the number of over-65s who lost work is at a record high after a decrease of 161,000 between April and June.

Jonathan Athow, deputy national statistician for economic statistics at the OFS, said the labour market had been “profoundly affected” by the pandemic.

He added: “As the furlough scheme unwinds and employers adjust their plans in the light of withdrawal of the furlough scheme and further economic developments, we might see some bigger changes in the labour market over the coming months.”

The number of benefit claimants has also soared as a result of widespread redundancies in the latest quarter, reaching a record 2.7 million last month.

Pay rates dropped for the first time since records began in 2001, down 0.2 per cent on average and bonuses down 1.2 per cent.

Capital Economics senior economist Ruth Gregory said the cracks showing in the labour market were “likely to soon turn into a chasm”, warning that further unemployment increases in the coming months are “all but inevitable” – describing the current state of the market as “just the lull before the storm”.

The Big Issue has launched the Ride Out Recession Alliance to fight back against the ‘inevitability’. We are fighting to hold thousands back from the financial cliff-edge that could result in a homelessness disaster. Read more to find out how we’re bringing together most innovative, urgent ideas from experts across housing and job creation to create a way forward.

Image: EPA/Andy Rain