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10:04 AM 11th August 2020
business

Warnings From Business As We Head Towards The End Of The Furlough Scheme

 
New figures released today by the Office for National Statistics (ONS) have revealed that employment in the UK has fallen by as much as 220,000 - the largest such rise since 2009.

Summary
Employment measures the number of people aged 16 years and over in paid work and those who had a job that they were temporarily away from (which they are expecting to return to). The employment rate is the proportion of people aged between 16 and 64 years who are in employment.

Estimates for April to June 2020 show 32.92 million people aged 16 years and over in employment, 113,000 more than a year earlier but 220,000 fewer than the previous quarter.
For April to June 2020:

The estimated employment rate for all people was 76.4%;
this is 0.3 percentage points up on the year but 0.2 percentage points down on the quarter the estimated employment rate for men was 80.2%;
this is largely unchanged on the year and 0.3 percentage points down on the quarter
the estimated employment rate for women was 72.8%;
this is 0.7 percentage points up on the year and 0.1 percentage points down on the quarter

Looking more closely at the decreases in employment over the quarter by age:
those aged 16 to 24 years decreased by 100,000 to 3.72 million
those aged 65 years and over decreased by a record 161,000 to 1.26 million.
This was partially offset by those aged 25 to 64 years, who increased by 41,000 on the quarter to 27.94 million.


Jeremy Thomson Cook, Chief Economist at Equals (part of the Equals Group) says: "The latest UK unemployment release confirms two things; the true level of those out of work has been very effectively lowered by the government’s furlough scheme but, more importantly when thinking about a recovery, the level of employment has continued to fall as those who have lost their jobs through the pandemic have not yet found their next role."

“The number of hours worked in the UK– the best metric for work completed through the furlough period – also continued to fall to record lows."

"Unfortunately, the end of the furlough scheme will present a cliff-edge, statistically and economically, for those currently relying on government support to make up their wages. Longer-term government stimulus to create jobs is needed to ensure the gap between the end of the furlough scheme and a rise in employment is not larger than it needs to be."

Suren Thiru
Suren Thiru
Also commenting on the ONS labour market figures, BCC Head of Economics Suren Thiruu said: “While the headline data continues to lag behind the reality on the ground, the decline in the number of employees on payrolls and hours worked is further evidence of the damage being done to the UK labour market by the Coronavirus pandemic.

“The furlough scheme has been successful in preserving millions of jobs. However, with firms continuing to face a perfect storm of increased costs, reduced demand, and diminished cash reserves, unemployment is likely to surge as the government support schemes wind down, unless action is taken.

“A significant spike in job losses would be a major drag on any recovery, stifling consumer spending and reducing the productive capacity of the UK economy.

“To help businesses recruit and retain staff, more needs to be done to reduce the overall cost of employment and prevent substantial redundancies. This could include significant expansion of the Employment Allowance and a cut in employer National Insurance Contributions.”

Frances O’Grady
Frances O’Grady
TUC General Secretary Frances O’Grady said: “The alarm bells couldn’t be ringing any louder. Ministers must act now to protect and create jobs.

“That means extending the job retention scheme for businesses with a viable future who can’t operate because of virus restrictions. It means investing in the jobs we need for the future in green industries, social care and across the public sector. And it means ensuring a decent safety net is in place to help those who lose their jobs get back on their feet.

“The more people in work the faster our economy will recover from this crisis.”

Zero-hours contracts

And commenting on ONS figures also published today that show the number of people on zero-hours contracts has risen to over a million, TUC General Secretary Frances O’Grady said:

“It’s shocking that there’s now a million people on zero-hours contracts. Many of these are the key workers who worked through the pandemic but still face the uncertainty of not knowing when their next shift will be.

“Government must ban zero-hours contracts now.”