COVID-19 is having a major impact on labor market: ONS
A measure of the number of people claiming unemployment benefits in Britain leapt to its highest level since 1996 in April, the first full month of the government’s coronavirus lockdown, data published on Tuesday showed.
The claimant count rose by 856,500 – the biggest ever month-on-month jump – to 2.097 million, a 69 percent increase, the Office for National Statistics said.
The surge would have been even sharper without a government program to pay 80 percent of the wages of workers put on temporary leave by their employers, who do not count toward the unemployment total.
The ONS said emergency changes to Britain’s welfare system meant the claimant count number included more people who were still actually in work than normal, but the scale of the rise in claims showed the hit to the labor market.
“While only covering the first weeks of restrictions, our figures show COVID-19 is having a major impact on the labor market,” ONS Deputy National Statistician Jonathan Athow said.
A Reuters poll of economists had produced a median forecast for a leap of 676,500 in the claimant count, with forecasts ranging widely from just over 56,000 to as high as 1.5 million.
Tej Parikh, chief economist at the Institute of Directors, said the government’s wage subsidy scheme was holding off some job losses for now but it was not clear how firms would react when they are required to help fund it from August.
“Many companies will still be in the middle of a cashflow crisis, and will struggle with any cost increases. Government faces an onerous task in winding down the scheme without causing too much pain,” he said.
Experimental data for jobs in April, based on tax figures, showed the number of people on companies’ payrolls fell by 1.6 percent from March and were 1.2 percent lower than a year before.
Vacancies fell by the most on record in the February-April period, down 170,000 to 637,000, with hospitality job openings falling the most.
Other data published by the ONS served as a reminder of how strong Britain’s labor market was going into the COVID-19 crisis.
Britain’s unemployment rate fell to 3.9 percent in the January-March period – covering only one week of the lockdown which began on March 23 – from 4.0 percent in the three months to February.
Employment grew by 211,000 in the first three months of the year compared with a forecast for jobs growth of 50,000 in the Reuters poll.
But with much of the economy shut down by the government to slow the spread of coronavirus, Britain could be heading for its sharpest economic slump in more than 300 years, the Bank of England has warned.
The country’s budget forecasters have warned the unemployment rate could hit 10 percent in the April-June period, even with millions of workers shielded by the government’s scheme to pay their wages while they are temporarily laid off.
A clerk works in an ice cream store in London, Britain, May 17, 2020. Some restaurants, cafes and other catering shops in Britain have gradually resumed business with preventive measures like keeping social distancing after the British Government released a phased easing strategy from the novel coronavirus lockdown. (Photo by Tim Ireland/Xinhua)
