Furlough numbers fall, unemployment rises

More than half of those furloughed since May returned to work by mid-August according to data published by the Office for National Statistics (ONS), but unemployment levels are increasing

At the peak of the coronavirus job retention scheme (CJRS) in May, 30% of the workforce across the UK was furloughed. The share of the workforce furloughed fell by more than half to 11% by mid-August - and will likely have fallen further since, the Treasury said.

The figures also show the impact of Eat Out to Help Out and the cut to VAT for jobs in the hospitality and leisure sectors in August, as data shows the proportion of workers furloughed in these sectors fell from over 80% in May to less than 30% in mid-August.

HMRC statistics show that the number of employments furloughed peaked at 8.9m on 8 May, with 9.6mn employments in total furloughed for at least part of the period between March to June.

The total value of all CJRS claims made up to 31 August is £37.5bn.

Over the summer, ONS data shows that less than 1% of the workforce was made redundant in every two-week survey period.

The ONS Business Impact of Coronavirus Survey also shows that the flow of employees off furlough has been steady, falling by 6% in late July and a further 6% in early August.

By the time the scheme closes, it will have been open for eight months, with support continuing in the form of the job retention bonus which starts from November and supports the wages of staff brought back to work.

The Treasury says the £1,000 payment under this scheme is equal to a 20% wage subsidy for the employment costs of the average person previously furloughed. For those on lower incomes, it represents 40% of wage costs over the 3-month period to the end of January 2021.

However, the latest ONS labour market statistics suggest the unemployment rate is rising.

The number of employees in the UK on payrolls in August was down around 695,000 compared with March 2020. Over the quarter, there has been a large decrease in the number of young people in employment, while unemployment for young people has increased.

While redundancies were still historically low, both the quarterly and annual changes are the largest seen since 2009.

Although the number of people who are estimated to be temporarily away from work (including furloughed workers) has fallen, it was still more than 5m in July 2020, with over 2.5m of these being away for three months or more. There were also around 250,000 people away from work because of the pandemic and receiving no pay in July 2020.

Vacancies continued to show increases in the latest period, driven by the smaller businesses, some of which are reporting taking on additional staff to meet coronavirus guidelines.

The claimant count reached 2.7m in August, an increase of 120.8% since March.

Jack Kennedy, UK economist at the global job site Indeed, said: ‘For months the official unemployment rate has resembled an iceberg - deceptively small and with the true toll of the pandemic largely hidden beneath the surface.

‘But as the months go by we’re starting to see official signs of the danger ahead. The unemployment rate has picked up from the record low rate at which it held during the three months following March, but even at 4.1% it paints a deceptively rosy picture.

‘As the end of the furlough scheme approaches, the sheer scale of the UK’s job losses is looming larger and the labour market is recoiling in response.

‘While the number of vacancies is slowly picking up, there are still far fewer jobs available than there were at the start of 2020 and with an ever-rising number of people chasing after them this has bolstered competition.’

Matt Weston, managing director of Robert Half UK, agreed that while the unemployment picture is worsening, but maintained ‘it is definitely not all doom and gloom’.

‘Almost three quarters of businesses we’ve spoken to recently said they had hired or onboarded new staff remotely during the lockdown period, while a similar proportion expect to employ further full-time staff between now and December.

‘As businesses seek to get back on their feet and take advantage of growth opportunities in this new normal, many are looking for skilled workers to support them.

‘Business management-focused skills, particularly in the areas of IT security and financial management, will be core to maintaining resilience in the face of a second wave, as well as supporting business change strategies.

‘Employers are also looking to those with specific “soft” skills, including creative thinking, effective communications and agility, to help navigate continued uncertainty,’ Weston said.

Useful links:

HMRC CJRS statistics

ONS labour market data

ONS Business Impact of Coronavirus Survey

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