Paid employment in Britain has plunged by almost 650,000 employees since the onset of the coronavirus pandemic in March, official figures show, as growing numbers of companies cut jobs.
According to the Office for National Statistics, the number of payroll employees fell by 2.2%, or 649,000, from March to June. However, it said the rate of decline in employment slowed in June compared with May.
In a reflection of the shock to the economy during lockdown as businesses were forced to temporarily close, the latest snapshot showed the number of hours worked in Britain plummeted between March to May 2019 and March to May 2020 at a record pace. Hours worked each week dropped by 175.3m, or 16.7%, to 877.1m in total, marking the steepest fall since records began in 1971.
Growing numbers of companies have started to announce plans to cut thousands of jobs, while business groups and trade unions have warned unemployment would surge as the government winds down its furlough scheme.
Frances O’Grady, the general secretary of the TUC, said: “There’s a national disaster unfolding, with vacancies at an all-time low and more jobs lost every day. But ministers are watching from the sidelines, instead of saving jobs with targeted support for the hardest-hit sectors like retail, manufacturing and aviation.”
Despite the mounting scale of the economic shock inflicted by Covid-19, the latest figures from the ONS did not reveal a dramatic rise in the official gauge of unemployment in May, with the jobless rate remaining unchanged at 3.9% – the lowest level in 40 years.
However, as many as 9.4m jobs have been furloughed on the government’s wage subsidy scheme, meaning those employees are neither in work nor officially unemployed. The scheme is due to be scaled back from the start of August before closing completely at the end of October.
The ONS said that in May that as many as half a million people were away from work because of the pandemic and receiving no pay. Average total pay across the workforce, including bonuses, fell by 0.3% from a year ago, in the first decline since 2014 and the biggest fall since 2009.
The latest snapshot also showed the number of people out of work who would like a job – but who are not currently looking for one – jumped by 253,000 on the quarter, the most since records began. Analysts said this reflected the difficulty of job hunting during the global health emergency, and helped to explain why the official unemployment had not risen.
Matthew Percival, the director for people and skills at the CBI, said: “These figures show serious difficulties for hundreds of thousands of people, but unfortunately this is still only the beginning of the impact on the labour market. Flattening the unemployment curve will remain paramount.”
The jobs market figures came after the Office for Budget Responsibility, the government’s economic forecaster, warned that at least 10%, and as many as 20%, of people on the furlough scheme would become unemployed as support was removed.
It said its central scenario was for unemployment to reach a peak of 12% before Christmas, more than double the current official jobless rate, and the highest level since the 1980s.
The chancellor, Rishi Sunak, said it was clear Britain was in the middle of a severe economic downturn.
“I know people are anxious about losing their jobs and incomes. As I said last week, we will never accept unemployment as an unavoidable outcome, which is why I set out our clear plan last week to protect, support and create jobs.”