UK employment falls at fastest rate in more than a decade

UK employment fell at its fastest rate in more than a decade between April and June, while wages shrank as the Covid-19 pandemic took its toll, according to figures released by the Office for National Statistics on Tuesday.

Employment declined by 220,000 on the quarter, marking the largest quarterly fall since the wake of the financial crisis in 2009. The figures also showed that a further 81,000 people fell off company payrolls last month, giving a total of 730,000 since March, when the coronavirus lockdown began.

Meanwhile, between January to March and April to June, total actual weekly hours worked fell by a record 191.3 million, or 18.4%, to 849.3 million hours. This was the largest quarterly decline since estimates began in 1971, with total hours dropping to the lowest level since September to November 1994.

The unemployment rate was unchanged in June at 3.9% versus expectations of an increase to 4.2%, but this was just a reflection of the fact that more people gave up looking for work. Average earnings excluding bonuses were down 0.2%, while earnings including bonuses were 1.2% lower compared to expectations for a 1.1% fall.

ONS deputy national statistician for Economic Statistics Jonathan Athow said: "The labour market continues recent trends, with a fall in employment and significantly reduced hours of work as many people are furloughed.

"Figures from our main survey show there has been a rise in people without a job and not looking for one, though wanting to work. In addition, there are still a large number of people who say they are working no hours and getting zero pay.

"The falls in employment are greatest among the youngest and oldest workers, along with those in lower-skilled jobs.

"Vacancies numbers began to recover in July, especially in small businesses and sectors such as hospitality, but demand for workers remains depressed."

Ruth Gregory, senior UK economist at Capital Economics, said: "Overall, we doubt the apparent stability in the ILO unemployment rate will last long. Indeed, with further rises in unemployment in the coming months all but inevitable as the furlough scheme unwinds, this is just the lull before the storm.

"Our forecast that the unemployment rate will peak at 7% in mid-2021 and remain above its pre-pandemic level of 4% until the end of 2022, suggests that the economic recovery will be slow going."