ONS | Payrolls shrink by 650,000 during lockdown

Payrolls shrink by 650,000 during lockdown

The number of people on UK company payrolls during the period March to June 2020 has dropped by circa 649,000, according to the latest ONS stats.

Unemployment has not surged, as many feared, because large numbers of firms have put employees on the Government-backed furlough scheme.

But economists say the full effect on employment will not be felt until the scheme ends in October.

Confusing picture

Although the headline unemployment figure has changed – staying at almost four per cent between March and May, unchanged from earlier in the year – analysts say this is because of the furlough scheme.

As such, according to BBC reports, the number of hours worked per week is currently a truer reflection of the impact of the coronavirus crisis.

The Office for National Statistics (ONS) said that since the start of the pandemic, total weekly hours worked in the UK had fallen by a record 175.3 million, or 16.7%, to 877.1 million hours.

"This was the largest annual decrease since estimates began in 1971, with total hours dropping to its lowest level since May to July 1997," the ONS added. “The Labour Force Survey is showing only a small fall in employment but shows a large number of people who report working no hours and getting no pay.”

In addition, Indeed figures state that job postings have been down by 60% since the start of the pandemic – further indication the employment landscape is struggling.

Optimism or pessimism

Despite the drop in hours worked, and the shrinking of the UK’s overall payroll, some analysts still have faith in the UK’s ability to create jobs.

Neil Carberry, Chief Executive of the Recruitment and Employment Confederation, said: “We must remember that the British economy is always creating jobs.

“Our Jobs Recovery Tracker suggests that job ad numbers have been rising since early June. In the next few months the key will be helping firms retain staff as furlough ends – that’s why the REC has called for a targeted cut in National Insurance – and helping those who do lose their job to find new work quickly.  

“The recruitment industry welcomed the Chancellor’s plans on this last week. Recruiters are ready to help get people into work and keep unemployment down as much as possible.”

Not all share Carberry’s optimism. Gerwyn Davies, Senior Labour Market Adviser at CIPD, added: “The jobs market appears resilient on the surface, owing largely to a modest rise in redundancies. However, the sting in the tail is the record fall in demand for workers – especially in the worst-affected sectors such as accommodation and food services – and the sharp drop in the number of hours worked.

“The situation can only deteriorate rapidly over the rest of the summer and into the autumn as young people enter the labour market. We would also urge employers to only make redundancies as a last resort and explore all other options first. This could include restricting over-time, cutting bonuses and deferring salary increases.”

In addition, James Reed, Chairman of REED, added that the picture for UK employment is mixed at best.

He said: “Today’s employment statistics paint a bleak picture of how lockdown has affected the UK’s economy. Even with the Government’s recently announced measures to support ‘jobs, jobs, jobs’, the labour market is on a knife-edge. The risk of mass unemployment remains high.

“Hopes of a V-shaped recovery were dashed earlier this week by May’s disappointing GDP figures.  

“Nevertheless, green shoots are beginning to appear in different sectors of the jobs market. There were marked increases in financial services and estate agency. Furloughed or unemployed workers may need to consider their transferrable skills or reskilling and upskilling to adapt to new sectors where the opportunities exist.”

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