Coronavirus: job cuts start to bite

The scale of Britain’s looming unemployment disaster was made clear today with the publication of the latest data on jobs and work.

The monthly unemployment figures for May (flat month on month) today don’t tell the full story, because the government’s furlough scheme protecting 9.1m employees is still in operation and there is a time lag in the figures. But a tranche of findings issued by the Office for National Statistics suggest that the damage – yet to become visible – will be serious.

The number of UK employees on payrolls fell by over 600,000 from March. This is lower than some of the higher predictions, which included speculative figures as high as two million. But the number of vacancies available in May has fallen to a record low, falling by an estimated 60% between March and May, 342,000 fewer than in the previous quarter.

The largest change is in the number of Britons classed as temporarily out of work, which includes those on the government furlough scheme. That rose by six million between March and April at a current cost to the Exchequer of over £14 billion per month. Employee average pay growth also slowed in April, falling in real terms for the first time since January 2018.

The period February to April saw a record fall in the quarterly number of self-employed in Britain. The number claiming job-related Universal Credit increased to 2.8 million, an increase of 23.3% during the month of May, and a 125.9% increase (or 1.6 million) since March.

The full economic impact of the lockdown is likely to be felt when the Job Retention Scheme is unwound between August and October. Hitherto “concealed” job losses are likely to skyrocket as employers previously reliant on government funds to cover their wage bills find themselves going out of business or cutting back.

The Chancellor, Rishi Sunak, has ruled out a “cliff edge” in which support is suddenly withdrawn, but it remains an inescapable fact that the government will not be able to extend the furlough scheme indefinitely, and it will not be able to prevent many businesses from going bust.

This employment emergency is likely to dominate the politics of the second half of this year. Demonstrating that the government will come under intense pressure – even from its own side – former Conservative leader Lord Hague wrote a withering column for the Telegraph today. Laying bare the catastrophic economic consequences of the lockdown, Hague warned that a repeat, in the event of a second spike, is financially unthinkable. He said that for many families, the recession will mean “depression, family breakdown and despair”. He called upon the government to follow the advice of his once-nemesis Tony Blair’s Institute for Global Change, which recommends the introduction of testing on “a truly massive scale” so that a second lockdown can be avoided.