More than 600,000 UK workers have lost their jobs amid the coronavirus lockdown and benefit claims soared by a record 1.6 million, but experts warn the worst is yet to come for Britain’s labour market.
The Office for National Statistics (ONS) said early estimates showed the number of paid employees dropped by 2.1% or 612,000 in May compared with March while job vacancies also slumped to a record low last month.
Claims under Universal Credit by the unemployed and those on low incomes jumped 23.3% month-on-month in May to 2.8 million and have rocketed 125.9% or 1.6 million since March – with a record rise of over 1 million in April alone.
The grim ONS data also showed the number of people temporarily away from work, including furloughed workers, rose by six million at the end of March into April, hitting 8.4 million at the end of April.
This saw hours worked each week tumble by a record 94.2 million, or 8.9% year-on-year, in the three months to April, the ONS said.
But the UK jobless rate remained largely unchanged quarter-on-quarter at 3.9% in the three months to April, with unemployment at 1.34 million as nearly nine million workers were furloughed under the Government’s support scheme.
Experts said while the data shows the painful toll taken by lockdown, the true impact will only be shown after the current furlough scheme to support workers ends in October.
Yael Selfin, chief economist at KPMG UK, said: “The true impact of the crisis on the labour market is likely to only be revealed once the job retention scheme starts unwinding in the second half of the year.
“Many businesses are expected to bring only part of their furloughed workers back, while they seek to tentatively reopen after the lockdown.
“Hiring new workers is also likely to be put on hold for some time.”
Job vacancies also laid bare the impact of lockdown, plummeting to an estimated 476,000 between March and May – down 342,000 on the previous quarter and the lowest since current records started in 2001.
The ONS said vacancies also slumped around 60% in May compared with March.
Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “The slowdown in the economy is now visibly hitting the labour market, especially in terms of hours worked.”
Figures showed employee average pay growth slowed notably in April 2020 and the three months to April saw total pay including bonuses fall in real terms for the first time since January 2018 – down by 0.4% after inflation.
The ONS said pay fell in industries where furloughing was most prominent, with many of these being the lowest-paying industries, such as accommodation and food service activities.
It comes as vast swathes of the UK workforce have been furloughed on 80% of their salary, with only a small minority of firms ensuring pay is topped up to 100%.
Samuel Tombs at Pantheon Macroeconomics warned that unemployment will surge “if only a small fraction of employers never bring back furloughed workers”.
He added that the collapse in job vacancies also “points to much faster falls in employment ahead”.