• The ONS figure for claimant unemployed is 2,801,700, sharply up by 1,561,600 on March, and the claimant rate is 7.8%.
• The ONS figure for 18-24 claimant unemployed is 522,900 in May, up by 287,900 or 122.5% on March.
• Vacancies fell 342,000 in the three months to May.
• Single month vacancies fell 477,000 or 60.0% in May from February.
• Unemployment in February-April 2020 was 1,336,000, down by 12,000 from last month’s published figure (quarterly headline has fallen by 8,000) and the unemployment rate 3.9%, showed no change at on last month and was stable on last quarter.
• The number of workless young people (not in employment, full-time education or training) is 1,026,000, and has risen by 50,000 on the quarter, representing 14.9% of the youth population (up by 0.8 percentage points).
• Youth unemployment (including students) is 528,000, and is up by 21,000 on the quarter.
• The employment rate in February-April was 76.4%, (down by 0.3 percentage points on last month’s published figure and down by 0.1 percentage points in the preferred quarterly measure).

This briefing supplements our early briefing published this morning on our website. It does not repeat the early briefing or charts: this is additional to the early briefing.

Join us at our webinar tomorrow (17 June), to discuss these figures further. We will welcome comments from Stephen Evans, Shadow Employment Minister, Seema Malhotra MP and chief executive of ERSA, Elizabeth Taylor. Sign up here.

Learning and Work Institute comment

The headline labour market figures published on 16 June covering February to April still show no impact of the coronavirus pandemic. However, more timely indicators point to a dramatic negative impact of the crisis on a range of labour market indicators.

Duncan Melville, chief economist at Learning and Work Institute, commented:

The headline numbers for employment, unemployment and economic inactivity released today all cover February to April of this year. A little under a half of these three months was after the onset of the social distancing / lockdown measures put in place by the Government to combat the COVID-19 pandemic. Thus, it is surprising that there is still no sign of the impact of Coronavirus pandemic n these numbers. In the three months to February to April employment rose by 6,000, unemployment fell by 8,000 and inactivity amongst people of working age rose by 39,000. These are all very modest changes.

The single month LFS estimates released today show much more fully the impact of the crisis. Compared to March, employment in April was 318,000 lower. However, in April, ILO unemployment only increased by 40,000 while economic inactivity amongst people of working age increased dramatically by 425,000. Hence, the deterioration in employment in the month was reflected not in substantially higher unemployment, but in people exiting the labour market into inactivity. This presumably reflects the Government’s decision not to enforce job search requirements for Universal Credit between late March and late June due to the pandemic.

Other more timely indicators point clearly to the massive hit to the labour market that the COVID-19 pandemic has caused.

In May, the claimant count measure of unemployment rose by 528,900 to 2,801,700. This is its highest level since the early 1990s in the wake of the recession then. Over the two months since March, the claimant count has risen by 1,561,600 - a rise of 126 per cent in just two months.

At the end of April, total hours worked were 259 million hours lower than at the start of March - a fall of 24.3 per cent. Over the same period, employment fell by just 1.1 per cent, this demonstrates the effectiveness of the Coronavirus Job Retention Scheme. Total working hours are falling because so many workers are furloughed and so still employed but working zero hours.

Monthly vacancy figures for May were running at 318,000 which is 60 percent down on the pre-crisis levels of February. In May there were 8.8 claimant unemployment for each vacancy compared to just 1.6 in February. This is more than a five-fold increase, and the figure for May is also more double the peak of the ratio of claimant unemployment to vacancies seen in the aftermath of the Great Recession - 4.0 in January 2010. The weekly ONS Online Job Advert Estimates bottomed out at start of May and advert levels have picked up slightly since, but, even so, at start of June advert levels were still less than half those seen at the start of March.

The HMRC estimate of the number of paid employees fell by 163,000 in May and compared to March was 612,000 lower - a fall of 2.1 percent.

These figures above need to be seen within the context of the pandemic related shrinkage in the UK economy. Data released last Friday indicated that in April the economy contracted by 20 percent, and by 25 percent over the two months since February. The falls in employment up to the end of April and in paid employees between March and May were magnitudes smaller than the fall in economic output between February and April. This again points to the important impact the Coronavirus Job Retention Scheme is having in keeping workers who would otherwise lose their jobs in work.

Turnover figures from the Business Impact of Coronavirus (COVID-19) Survey for the first half of May showed one in five businesses having temporarily closed / paused trading and of those still operating around three fifths reported reduced turnover levels compared to the previous two weeks with around a quarter reporting turnover reductions of more than 50 percent. This suggests that the contraction in economic output seen between February and April continued into May.

Looking further forward, last week the OECD published a forecast for the UK economy. This suggested that GDP could fall by between 10.5 and 14 percent this year overall depending on whether or not there is a second outbreak of COVID-19 later in the year. In the single hit scenario, the OECD project that the unemployment rate will peak at 11.7 percent in the third quarter of this year and average 9.1 percent for the year as a whole. This projection is similar to that set out in the latest L&W research report, Emergency Exit, published on Friday which projects a potential increase in unemployment to a peak of 12 percent or 4 million. This report sets out the impact of coronavirus on the labour market, the likely scale of the challenge we face, and identifies policy priorities to get Britain back to work. 

The report calls on the Government urgently to introduce an ambitious ‘Plan for Jobs’, including;

• Large-scale investment and incentives to create jobs with shovel-ready and jobs-rich schemes brought forward. Rather than cutting employer taxes - which would be expensive and less effective - action should be taken to stimulate demand, including through car and boiler scrappage schemes.

• A Youth Guarantee to prevent a rise in long-term youth unemployment, including maintenance support to help 18 year olds to stay on in education; an Opportunity Fund to create ring-fenced temporary jobs for young people; and reforms to the apprenticeship system to re-focus funding on young people.

• A massive expansion of help to find work, including for the millions of furloughed workers at risk of losing their jobs. This should include £800 million in redundancy, retraining and reemployment support, at least 10,000 extra Jobcentre Plus Work Coaches, and £2.4 billion of support for the long-term unemployed.

This newsletter is produced by Learning and Work Institute and keeps readers up to date on a wide range of learning and work issues.

If you have any questions, contact Paul Bivand
© 2020 Learning and Work Institute. All rights reserved. 
Click here to unsubscribe | Click here to see a web copy of this email