The number of people in the UK claiming unemployment benefits jumped at the highest rate on record in the early weeks of the coronavirus lockdown, while average pay fell and hiring ground to a halt, according to government figures.
The number of people claiming unemployment-related benefits jumped by 69 per cent to 2.1m between March and April, the biggest month on month increase since records began in 1971, according to data from the UK’s Office for National Statistics.
The rise of 856,500 in jobless claims is an early indication of the scale of outright job losses resulting from the coronavirus lockdown. The sharpest increases in claimants were seen in the South West and South East of England.
“Today’s figures highlight the speed and scale of Britain’s job crisis . . . even despite widespread furloughing, Britain could still be facing the highest unemployment levels it has had in over a quarter of the century,” said Nye Cominetti, an economist at the Resolution Foundation, a think-tank.
Separate data, based on real-time figures collected by HM Revenue & Customs, shows that the number of paid employees in the UK fell by 450,000 — a drop of 1.6 per cent between March and April and a 1.2 per cent fall year on year.
These figures are experimental data, where the ONS is still developing its methodology, but they give a sense of the scale of job cuts made on top of the much larger numbers of employees — 7.5m at the Treasury’s last count — who have been furloughed, but are still on employers’ payrolls.
“It’s clear that without the government’s furloughing scheme, the picture would rapidly have deteriorated even further,” said Tej Parikh, chief economist at the Institute for Directors.
Official ONS data, although less timely than the experimental figures, show the sudden stop in hiring that took place as the lockdown brought the labour market to a grinding halt in March and April.
The number of vacancies — estimated at 637,000 in the three months to April — was 170,000 fewer than the previous quarter and 210,000 fewer than a year earlier.
The ONS said this was the biggest quarterly decrease in two decades, “eclipsing” that seen in early 2009, in the aftermath of the financial crisis, and the biggest annual decrease since 2009.
The drop in vacancies “suggests that very few unemployed people will be able to find a job quickly”, said Samuel Tombs, at the consultancy Pantheon Macroeconomics.
The Institute for Fiscal Studies, which has conducted its own analysis of vacancies advertised on the government’s Find a Job website, said the sharpest falls in vacancies had been for low-paid jobs in the sectors directly affected by social distancing measures. However, the new vacancies for higher paid jobs in legal and managerial professions had also dropped by more than 60 per cent year on year.
A tentative recovery in hiring since mid-April was almost entirely driven by vacancies in health and social care, the IFS added, with even these jobs concentrated in more affluent areas.
The ONS’ official figures for unemployment, also published on Tuesday, are an average of the three months up to March and so capture only some of the early effects of the lockdown. They show UK employment at a record high of 76.6 per cent going into the crisis, with unemployment at 3.9 per cent, barely changed from the previous quarter.
However, weekly data on hours worked give a better reflection of the initial damage, showing hours down by 6 per cent in the penultimate week of March, and by a further 16 per cent in the last week.
“It’s clear that employers’ first reaction to the crisis was to cut jobs and hours,” said John Philpott, director of The Jobs Economist, a consultancy, adding that the PAYE data would be “the precursor of a far bigger drop in employment for both employees and the self-employed”.