Dip in unemployment shows early signs of UK jobs market recovery

The UK’s unemployment rate fell slightly to 4.8 per cent in the three months to March, down from 4.9 per cent in February, according to the latest figures from the Office for National Statistics (ONS). 

The ONS said the unemployment rate, down 0.3 per cent from the previous quarter, suggested that the jobs market had been “broadly stable” in recent months and showed “some early signs of recovery”.

There were also encouraging signs in the number of job vacancies, which hit their highest level since the start of 2020 as the easing of lockdown measures encouraged employers to start recruiting again. Most industries showed an increase in job vacancies in the period from January to March, with the biggest increases in the accommodation and food service sectors.

Matthew Percival, people and skills director at the Confederation of British Industry, said: “Having the highest number of vacancies since the pandemic first hit shows the value of the road map for reopening the economy. However, businesses are starting to report vacancies they’re struggling to fill so government support for skills and retraining is essential.”

Figures suggest more than one in ten UK hospitality workers left the industry in the last year, and some bars and restaurants have struggled to recruit enough staff to fully reopen this month.

Separate figures from HM Revenue and Customs showed that the number of workers on payrolls had risen by 97,000 between March and April, but was still 772,000 lower than before the pandemic struck. The biggest falls in employment came in the hospitality sector among the under 25s, and those living in London.

Suren Thiru, head of economics at the British Chambers of Commerce, said: “UK unemployment remains on track to peak at a much lower level than in recent recessions. However, the squeeze on business cash flow from any marked delay to the planned full reopening of the economy may trigger renewed job losses, particularly when furlough becomes less generous over the summer.”

She said the economic scarring caused by the coronavirus may drive a two-track jobs market recovery, with strong demand for sectors where activity rebounds quickly but a risk of longer-term unemployment for young people and those who lost their job during the pandemic.

Thiru said: “More interventions are likely to be needed to support the UK jobs market, including extending the kickstart scheme to help protect young people from the risk of displacement from the labour market.”

Responding to the latest figures, chancellor Rishi Sunak said: “Protecting and creating jobs continues to be my top priority,” adding: “While sadly not every job can be saved, nearly two million fewer people are now expected to be out of work than initially expected.”

The government’s bill for tackling Covid-19 has risen by £100bn since the start of the year and now stands at £372bn, according to the independent watchdog that oversees Whitehall spending. The National Audit Office’s cost tracker found that almost half the £372bn had been earmarked for support for businesses, including spending on the coronavirus job retention scheme and bounce-back loans.