The Office for National Statistics (ONS) found work hours also fell sharply in late March, when the UK’s lockdown began, and warned figures for April showed signs of a further fall in employment.
“While only covering the first weeks of restrictions, our figures show Covid-19 is having a major impact on the labour market,” Jonathan Athow, deputy national statistician for economic statistics at the ONS, said.
“In March employment held up well, as furloughed workers still count as employed, but hours worked fell sharply in late March, especially in sectors such as hospitality and construction.
“Through April, though, there were signs of falling employment as real-time tax data show the number of employees on companies’ payrolls fell noticeably, and vacancies were sharply down too, with hospitality again falling steepest.”
Job vacancies have significantly decreased, with the number of empty posts in the three months to April falling by 170,000 to 637,000, compared to the previous quarter.
Sir Christopher Pissarides, from the London School of Economics, told BBC Radio 4’s Today programme that hours of work figures “fell catastrophically” from January to March, while vacancies figures showed the labour market “more or less stopped functioning” during the period.
However, he noted employment figures were “not as bad” as they could have been and suggested the government’s furloughing scheme had managed to prevent a greater increase in joblessness.
“We should take encouragement from the unemployment figures to the extent that the furloughing has maybe had an effect and [the figures] haven’t risen as much as they would have done in a completely free market without government help,” Sir Christopher said.
The ONS data also showed a spike in the number of people claiming unemployment benefits in the UK, as the Claimant Count reached its highest level since 1996 in April at 2.1 million in total.
Figures showed a surge of 856,000 people submitting benefit claims in April, during the first full month of lockdown.
Therese Coffey, the work and pensions secretary, told the BBC that the government would be able to cope with the sharp increase in claims for unemployment support but noted the country should be prepared to see the unemployment rate increase “significantly” in the coming months.
“Meantime, the department is also working across government on what we can do to help people get back into the labour market once the economy properly recovers,” Ms Coffey said.
Sir Iain Duncan Smith, the former Conservative Party leader, suggested on Tuesday that the government should reconsider social distancing rules, arguing that the UK was “the only country certainly in Europe that I know of” that uses the two-metre rule.
“I think when it comes to the hospitality sector, I think we do need to look at it very carefully,” the Tory MP said.
“So we do need to look at how they manage that process and give them some flexibility.”
The World Health Organisation has recommended people keep at least one metre between each other to reduce the risk of catching Covid-19.
Additional reporting by PA