News | Published August 11 2020

ONS: April to June brings largest quarterly employment decline in over ten years

Figures from the Office for National Statistics indicate that employment fell by 220,000 between April and June 2020, the largest quarterly decline since May to July 2009 during the financial crisis.

The unemployment rate was estimated to be 3.9 per cent, with minimal change from the previous quarter with millions of people falling back on the government’s job retention scheme.

The ONS said that young people, individuals in manual roles and older workers were among the most affected by redundancies.

The ONS’ deputy national statistician, Jonathan Athow, said: "The groups of people most affected are younger workers, 24 and under, or older workers and those in more routine or less skilled jobs.

"This is concerning, as it's harder for these groups to find a new job or get into a job as easily as other workers."

Although the government’s job retention scheme has kept mass unemployment at bay for the time being, analysts fear that an increase could come over the next few months as the scheme lapses in October. Indeed, many firms across the country are already announcing cutbacks.

With the job retention scheme seeing millions of individuals furloughed, the number of average hours worked fell further over April and June to record quarterly and yearly lows, while the number of people working on zero-hours contracts soared to over one million.

April to June also saw a decrease of 238,000 people declaring themselves self-employed, with the total now standing at 4.76 million, around 14.5 per cent of the employed workforce.

7.5 million people were estimated to be taking time off work in June, including furlough, and three million of these had not worked for three months or more.

The number of people on the job retention scheme has now risen to almost ten million.

There was also a decrease in pay for those who were still working, with regular pay levels falling by 0.2 per cent compared with 2019. It is the first time that negative pay growth has been seen since 2001 when this data started to be recorded.

The ONS said added that early indicators suggest around 730,000 less people were on payroll during July this year compared to back in March.

Capital Economics’ senior UK economist Ruth Gregory called the employment figures a “lull before the storm”, predicting that unemployment will almost double by the middle of next year.

Gregory said: "The cracks evident in the latest batch of labour market data are likely to soon turn into a chasm, with the unemployment rate rising from 3.9 per cent to around 7 per cent by mid-2021."

She called a spike in unemployment “all but inevitable” when the government’s support measures come to an end.

After peaking at seven per cent in the middle of next year, Capital Economics has predicted unemployment will remain above its pre-Covid level of four per cent until the end of 2022, with Gregory warning that this hinted at a “slow going” economic recovery.

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Authored by

Alexander Bridge-Wilkinson
Junior Editor
August 11 2020

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