The UK Office for National Statistics (ONS) this morning published its latest set of numbers on the state of the labour market, which using US terminology we might collectively refer to as the monthly Jobs Report.
Looking at these figures is a bit like watching the early part of a slow-motion video of a car crash when you already know the horrible outcome but have only witnessed the initial jolt. The quarterly headline employment and unemployment numbers are little changed on the previous quarter, in part flattered by the inclusion of pre-Covid-19 lockdown figures but more importantly by the government funded furlough scheme which has so far acted as a life raft for millions of jobs. A surge in furloughed workers with jobs on partial pay but no work to do, plus many others hit by cuts in hours and pay, has had a big impact on employee incomes. The annual fall of 94.2 million in total weekly hours worked in the economy is a record decrease, in turn dragging the rate of growth of regular average weekly earnings down to 1.7%, or just 0.4% in real terms. However, we know the underlying jobs situation is much worse than this.
The ONS’ more up to date flash estimates based on PAYE data show that the number of employees fell by 612,000 (2.1%) between March and May, with Labour Force Survey data also suggesting a fall in self-employment of well over 100,000. Add in a record quarterly decrease in job vacancies, which will be hitting young job seekers especially hard as they try to enter the labour market, along with what we can see from a rise in claims by unemployed people for Universal Credit, and it’s clear that level of unemployment will by now be somewhere between 2.5 and 3 million. The key question for the coming months is how much higher the jobless rate climbs as the furlough scheme unwinds and we begin to discover what the post-Covid-19 employment landscape actually looks like.