ONS latest: unemployment biting

UK unemployment has continued to move upwards, hitting a three year high of 4.5% (or 1.52 million people) in the period from June to August 2020, according to new estimates released today by the Office for National Statistics. While 4.5% is relatively low by historic and international standards so far in a recession this still represents a sharp increase on 4.1% rate of the previous quarter.

The pain has also not been distributed equally: the young, men, and the self-employed are among the hardest-hit groups. Indeed, the employment rate for men was down by 1.1% points to 79.1% compared with June-August 2019, and down 0.6% points as compared with the previous quarter of 2020. By contrast, the employment rate for women actually rose by 0.4% points to 72.1% when compared to 2019, and fell by 0.1% points as compared with the previous quarter of 2020.

It is a similar story with regards to the young. The number of 16-24 year-olds in employment hit a record low of 3.54 million, with 167,000 losing their jobs in the period June to August. By contrast, 92,000 more people among those aged 25-64 actually gained a job in this period. Leading the charge were women aged 25-34 with a record 3.61 million in employment.

There has also been a sharp drop in the number of the self-employed. In the period June-August the ONS estimated that approximately 4,560,000 persons were self-employed, a drop of 240,000 or 5% as compared with the previous quarter.

Looking at wages, some sectors have been hit much harder than others. Pre-pandemic wages were growing fairly fast with annual total pay up 2.9% in the period covering December 2019 to February 2020 – in other words, just before the pandemic hit.

Now, however, in the period June to August annual total pay growth was flat which, accounting for inflation, means an 0.8% decrease in real terms.

Some sectors are faring far worse than this. Construction has been particularly hard hit with annual regular pay growth down 5.3% June-August. Manufacturing, and wholesaling retailing hotels and restaurants have also been hard hit, falling by 0.9% and 1.8% respectively.

Yet, two areas buck this trend – finance and business services and the public sector. The former has seen regular pay grow 2.25% in the same period and public sector workers have done even better seeing an average regular pay growth of 4.1%. The fact that wages in these sectors continued to grow throughout the pandemic and the lockdown suggest the trend is more indicative of the current emergency’s unequal impact on different industries and regions than actual green shoots of recovery.

And even where there is good news, it cannot be delivered without caveats.

Vacancies are up sharply, for instance. While the period April-June saw record low of 343,000 in new vacancies, the subsequent quarter running from July-September saw a record increase bring the total number of vacancies to 448,000. Admittedly, this is 332,000 (40.5%) lower than during the same time last year but the bounce back seems to be coming fast.

Intriguingly, the growth in vacancies is being driven by small business. Business with one to 9 employees saw an estimated 55,000 vacancies in this period, and those with 10-49 employees saw an estimated 43,000 vacancies. Larger businesses with over 2,500 employees only saw 4,000 vacancies.

Construction also appears to be experiencing something of a bounce back from it early pandemic nadir. There were 71.7% fewer vacancies in the period April to June than in January to March this year. In the period July September vacancies were only 18.2% lower than compared with the January March period.

Yet, even amid the – relative – good news of increased vacancies it is clear many sectors are struggling terribly. In the most recent quarters arts and entertainment still had 78.2% fewer vacancies than at the start of the year – accommodation and food services had 61.9% fewer vacancies. This isn’t as bad as at the start of the pandemic, but it’s still dire for those whose livelihoods have been caught up in a highly competitive industry.

Meanwhile, further increases in unemployment seem likely along with a new, less generous, Job Support Scheme, which is set to replace the furlough at the end of October. This, plus the continuing creep of new local lockdowns, makes for grim economic forecasting and could well blow off course even the modest gains made in some sectors.