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May 19, 2020

Economy | UK: Huge rise in people claiming unemployment benefit

6-7 minutes - Source: BBC

A woman sits at a desk working from home Image copyright Getty Images
Image caption People who are at home on furlough do not count towards the jobless numbers
The number of people claiming unemployment benefit in the UK soared to 2.1 million last month, the first full month of the coronavirus lockdown.
The total in April went up by 856,500, the Office for National Statistics (ONS) said.
Separate ONS figures showed UK unemployment rose by 50,000 to 1.35 million in the three months to March.
The unemployment rate was estimated at 3.9%, slightly down on the previous quarter, the ONS said.
Before the lockdown began, employment had hit a record high.
The benefit claimant count does not include everyone who is out of work, since not everyone is entitled to claim assistance, but it does indicate the trend in the employment market.

Claimant count
According to research by the Resolution Foundation, young people are most likely to have lost work or seen their income drop because of the coronavirus pandemic.
More than one in three 18 to 24-year-olds is earning less than before the outbreak, the research indicated.
It said younger workers risk their pay being affected for years, while older staff may end up involuntarily retired.

Bigger rise due

The jobless figures only cover the first week of the lockdown and the total is likely to worsen sharply in the coming months.
Jagjit Chadha, director of the National Institute of Economic and Social Research, told the BBC: "We can reasonably expect unemployment to rise very quickly to something over 10% - something we haven't seen since the early 1990s."
People who are at home on furlough are not counted in the jobless total.

However, the total number of weekly hours worked showed its largest annual decrease in 10 years.
Estimates based on returns for individual weeks suggest that this fall was mostly caused by the decrease in hours in the last week of March, with a much smaller decrease in the previous week, the ONS said.
In the final week of March, the total number of hours worked was about 25% fewer than in other weeks within the quarter.

Presentational grey line
The government's jobs schemes succeeded in keeping the headline jobs numbers high, and jobless data still quite low up until the end of March.
But there is evidence of the pandemic crisis impact starting to hit in the latest ONS jobs market release.
The number of job vacancies from February to April tumbled by 170,000 to 637,000 - a record quarterly fall. The claimant count jumped in April, while the average hours worked in a week fell sharply at the end of March.
So the signs of a significant downturn in the normal jobs market are there, but as is the impact of the extraordinary government support package. Unemployment would have shot through the roof without this support.
However, these numbers will get worse with next month's figures. The vacancy drop shows there are fewer jobs out there for those who do lose work. And there are real concerns as to what happens when the support starts to be phased away in August.

Presentational grey line

'Unprecedented emergency'

"The headline employment and unemployment data have registered no impact from Covid-19 because they are three-month averages and the UK only went into lockdown in late March," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
"Weekly data on total hours worked, however, show some of the initial virus damage; hours dropped by 6% in the penultimate week of March and by a further 16% in the final week.
"Timelier claimant count data also paint a bleak picture.
"In addition, the 24.8% year-over-year drop in three-month average measure of job vacancies in April - the steepest since October 2009 - suggests that very few unemployed people will be able to find a job quickly."
Therese Coffey, Secretary of State for Work and Pensions, told the BBC's Today programme that because of the pandemic, many people were coming to the benefits system for the first time.
Claiming for unemployment benefit was "an important part of the welfare system", she said.
She said the virus had caused an "unprecedented emergency", adding: "I think we should be prepared for the unemployment rate to increase significantly."
Shadow work and pensions secretary Jonathan Reynolds said the figures showed "the severity of the crisis we are facing".
He added: "Unfortunately, these claimants will now discover the UK has one of the weakest out-of-work safety nets in the developed world.
"We support the changes the government has made so far during the outbreak, but they do not match the scale of the crisis."

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