Sign of green shoots of recovery in the job market or is the worse still to come?
23 Mar 2021
On the day UK marked the anniversary of its first national lockdown, the Office for National Statistics (ONS) released data showing that 693,000 workers across the country have lost their job since the outbreak of the pandemic.
The unemployment rate now stands at 5%. However, the rate of growth has slowed and is only 0.1% higher than in January and, significantly, this peak is lower than many labour market analysts and economists had predicted earlier in the pandemic.
In fact, the current unemployment rate compares well to the last three major economic recessions of 1980s, 1990s and 2010s where the jobless rate peaked significantly higher at 11.9%, 10.6% and 8.4% respectively.
However, the critical difference between this and previous recessions is the action taken by the government on this occasion with its support in the form of the Job Retention Scheme allowing employers to furlough their staff instead of making people redundant.
Is furlough delaying inevitable job losses to come?
In addition to a slowdown in the unemployment rate, February also saw 68,000 more people being put on company payrolls compared with January.
However, this is not the entire picture. Many experts believe that with 4.7m people still on furlough, there is a ticking time bomb that may result in significant job losses as the scheme comes to an end in October.
Younger people facing brunt of job losses
The prospects for younger people don’t look great. They are facing the brunt of these job losses – of 693,000 of the people who have lost their job since February 2020, over 60% were under the age of 25. However, given that the under 25 are heavily represented in the hardest-hit industries such as hospitality and retail, the roadmap to opening up these sectors may reverse some of these losses.
For now, it’s a case of wait and see as the economy opens over the coming weeks and months.