Nearly three-quarters of a million individuals are no longer on company payrolls since Q2 of 2020, which is the largest drop since 2009 during the financial crisis.
This figure comes from the Office for National Statistics (ONS) labour market overview, which found that during April and June, the number of employees on payroll fell by 730,000. The period has also seen a 117 per cent increase in the number of people claiming unemployment benefits, resulting in 2.7 million people using this service in July.
Redundancies for the quarter reached 134,000, however, this is lower than the amount of redundancies during the 2008 financial crisis.
The data also showed that the number of hours worked during Q2 decreased by 203.3 million hours compared to the previous year and 191.3 million hours compared to the previous quarter.
The working groups hit worst by the COVID-19 pandemic seem to be the youngest, oldest and those in manual occupations. The ONS figures do not include those currently on furlough, individuals on zero-hour contracts or those on temporary unpaid leave as they are still employed by a business.
According to the National Institute of Economic and Social Research (NIESR), an independent economic research institute, there is a fear that by ending the furlough scheme at the end of October, unemployment could reach 10 per cent.
Jonathan Athow, deputy national statistician at the ONS, said:
The groups of people most affected are younger workers, 24 and under, or older workers and those in more routine or less skilled jobs.
This is concerning, as it’s harder for these groups to find a new job or get into a job as easily as other workers.
Lee Biggins, founder and CEO of CV-Library outlines how the furlough system has “created a false market” and that we are relying on data surrounding other factors.
Mr Biggins said:
Historically we’ve looked to the unemployment rate to provide insights on how our economy is fairing. However, the furlough scheme has created a false market and we’re now relying on data around factors such as hours worked and the number of jobs available to inform us instead. That said, unemployment rates have risen quite substantially since pre-COVID times and sadly, they will continue increase over the next six months.
The data also suggests that Brits have given up hope on finding new roles, as the jobless rate remains largely unchanged since June. Of course, this is understandable given that opportunities have been few and far between. But people shouldn’t give up hope as job numbers are continuing to pick back up; and our data shows that last week was a record-breaking week for new vacancies being posted on our site. Unfortunately, it’s going to be a bit of a waiting game for businesses and job hunters.
Robert Alster, chief investment officer (CIO) at investment management firm Close Brothers Asset Management, said:
Although employment in the UK fell by the greatest amount in over a decade, the reality is that the true effects of Covid-19 are still obscured by the protection of the furlough scheme. As we inch closer to the scheme drawing to a close, employment prospects are looking increasingly uncertain across all sectors, with the Bank of England forecasting a 7.5 per cent unemployment rate in the near future.
A wave of recent job cuts across the retail and hospitality industries highlights the ongoing impact of the lockdown, as businesses nationwide struggle to battle with the damage wrought by the pandemic. As consumer habits transform and with health policy at the forefront of the Government’s mind, it remains to be seen how the labour market will evolve to adapt to our new way of life. With flexible working now a necessity rather than a privilege, the UK’s productivity puzzle could get even more complex.
Louise Deverell-Smith, founder of Daisy Chain, the online recruitment platform matching parents with flexible job roles believes that although this is negative news, it means that the working world will move to a more flexible model with more equal opportunities for everyone.
Ms Deverell-Smith said:
The latest ONS figures confirm what we already know. The pandemic has taken its toll on the economy and, unfortunately, the jobs market often carries much of the burden during a decline. It’s clear we face a challenging road to recovery ahead, but many businesses in the UK have already shown great creativity, flexibility and extraordinary resilience to overcome turbulent months.
One undeniable fact is that remote and flexible working arrangements have helped to prevent further job losses and could also be a lifeline when rebuilding the economy. Flexible employment platform Daisy Chain saw employer sign-ups triple in June, and the increase in flexible roles being posted continued through July. It demonstrates a clear shift in approach to working arrangements from employers.
The pandemic has shown that many 9-5, Monday-Friday office roles could be a thing of the past. Many jobs can and are being done remotely, part time, or with compressed hours, alleviating some of the pressure on certain sectors and creating more job opportunities for others. Jobs and the economy are going to look a lot different in 12 months’ time, and now’s the perfect time to for businesses to get creative with how they approach talented individuals who are now, unfortunately, back on the jobs market.