Three-quarters of a million have fallen from company payrolls, ONS finds

11 Aug 2020 By Elizabeth Howlett

Unemployment figures remain largely unchanged but experts warn of ‘second peak’ when job retention scheme ends

Almost three-quarters of a million jobs have been dropped from company payrolls since the start of the coronavirus pandemic, the latest official figures have shown.

Early indicators for July 2020 suggest the number of UK employees on payrolls was down by 730,000 compared to March 2020, according to figures from the Office for National Statistics.

The data showed the total number of weekly hours worked between April and June 2020 was down a record 203.3 million hours on the previous year, and down 191.3 million hours on the previous quarter.

Employment levels have also decreased, with 220,000 fewer people in jobs compared to the previous quarter, marking the largest quarterly decline in a decade since the financial crisis in May to July 2009, with both men and women seeing decreases on the quarter.

Gerwyn Davies, senior labour market adviser at the CIPD, said the “figures were disappointing in many respects” and the sharp fall in employment highlighted “a dramatic deterioration for the employment prospects of young people, part-time workers and older workers in particular”.

"A real concern is that this is just the first wave of bad news for the jobs market. The fact that reduced hiring rather than increased firing of permanent staff is the main cause of the jobs slowdown to date bodes ill for the coming months if more employers turn to redundancies as a last resort,” said Davies.

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The figures suggested that the oldest and youngest workers were bearing the brunt of the crisis, as the largest driver of the quarterly decrease in employment was workers aged 65 and over – down by a record 161,000 to just 1.26 million. Employment levels among those aged 16 to 24 decreased by 100,000 to 3.72 million, but these figures were partially offset by those aged 25 to 64, who saw employment increase by 41,000 on the quarter to 27.94 million.

Joanne Frew, national head of employment at DWF, said the statistics concerning the youngest and oldest workers were cause for concern. "With several local lockdowns and predictions of a possible second wave of Covid-19, it is unlikely we will see any immediate improvement in the employment figures,” she said.

“However, as employers diversify and adapt to the new normal, we may see the statistics level out once the impact of the closure of the job retention scheme has taken effect.”

Today’s figures were not all bad news, however. While the data showed a weakening in employment, the UK’s unemployment rate – estimated at 3.9 per cent – was largely unchanged both on the year and on the previous quarter. This was down to increases in economic inactivity, with people out of work but not currently seeking new employment.

Neil Carberry, chief executive of the REC, said this was a “sure sign the job retention scheme [had] achieved its short-term aim”. “The challenge now is longer term. Payroll data for July shows 730,000 fewer people in paid employment than in March. As businesses make decisions about the staff they need, this number is likely to grow in the coming months,” he said.

But Stephen Evans, chief executive of the Learning and Work Institute, added that there may be a second wave of unemployment in October when the job retention scheme came to an end. “The government should look again at extending support for jobs in hard-hit sectors, and it must ramp up employment and training support for those who may lose their jobs,” he said.

Kirstie Donnelly, chief executive at City & Guilds Group, called on the government to redirect existing skills funding to ensure budgets for further education were being allocated to develop skills for the jobs available in the present and immediate future. “There is no more time for discussion; we need to act now to avoid leaving a generation behind,” added Donnelly.

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