UK employers have cut 695,000 jobs since March as unemployment rate rises
UK employers have slashed 695,000 jobs since March when the coronavirus first sent Britain into national lockdown. Britain’s official unemployment rate also increased as expected by analysts to 4.1% between May July from 3.9% a month earlier, according to new data from the Office for National Statistics (ONS) published on Tuesday.
Unemployment statistics have become increasingly controversial in recent months, however. A constant flurry of high-profile job losses have not been fully borne out in the government’s official figures. The employment rate even increased to 76.5%.
The figures’ definition follows International Labour Organisation rules, but critics highlight a large timelag in the data, the need to be actively job-hunting to count as unemployed, and the labelling of furloughed workers as employed.
Michael Hewson, chief market analyst at CMC Markets UK, called the official rate “not fit for purpose” in a note last week. “We’ve already seen swathes of job losses announced over the summer from airlines, aerospace and the retail sectors which will eventually start to show up in the headline numbers.”
It comes amid a clamour of warnings that unemployment will continue to rise later this year, and pressure for new government support for employers as the furlough scheme is wound down.
New analysis by the National Institute of Economic and Social Research (NIESR) on Monday predicted that unemployment could hit 9.8% in the final three months of the year.
Another think tank, the Institute of Employment Studies, predicted around 450,000 workers would have lost their jobs by the end of the autumn, after analysing official data on redundancies.
Meanwhile Trades Union Congress (TUC) general secretary Frances O’Grady told the union body’s annual conference on Monday Britain faced a “tsunami” of job cuts as support for employers was wound down by chancellor Rishi Sunak.
Ruby McGregor Smith, president of the British Chambers of Commerce (BCC), also announced on Tuesday she had written to prime minister Boris Johnson on Tuesday warning of a “difficult winter ahead.”
“If the government wishes to avoid mass unemployment, significant levels of business failure, and long-term economic scarring in our communities, we urge you and your colleagues to act now,” she wrote.
The BCC echoed the IES’ call for the government to slash the cost of keeping staff for employers by raising the thresholds for their national insurance contributions.
The Bank of England (BOE) also faces greater pressure for yet more stimulus from signs economic recovery is already stalling in parts of the economy. Economic analysts at ING expect more quantitative easing and say even negative rates are a “clear possibility.”
The central bank’s latest policy meeting will be closely watched for clues about what to expect this week, but no announcement is expected until November.
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