UK hours worked plunge with worse to come for jobs

The number of hours worked in the UK fell at a record pace as an extra 6m people stayed off work during the Covid-19 crisis, official figures showed.

Total weekly hours in the three months to the end of April fell by 94.2m, or 8.9%, to 959.9m a year earlier, the Office for National Statistics said.

The number of workers on payrolls dropped by more than 600,000 between March and May and job vacancies fell to a record low as the Covid-19 crisis continued to hit the labour market. ONS figures indicated vacancies plunged 60% between March and May. Total pay fell in real terms for the first time since January 2018.

The unemployment rate surprised economists by holding steady at 3.9% in April versus an average forecast for an increase to 4.5%. But the ONS's experimental figures showed the claimant count, which includes employed people applying for benefits, rose by 1.6m to 2.8m between March and May.

Experts warned the figures showed the government's furlough programme doing its job in limiting job losses while delaying the long-term damage once state support for workers' wages ends in October. Unions called on the government to enact a job guarantee scheme to prevent unemployment causing lasting damage.

Samuel Tombs, a UK specialist at Pantheon Macroeconomics, said the headline rate showed employment held "in suspended animation" by the government's job retention scheme. "The true damage from Covid-19 will emerge in the autumn," he said.

"The latest labour market figures show that the Treasury’s coronavirus job retention scheme has succeeded in preventing massive job losses so far, though a second wave of redundancies remains likely when financial support for employers who furloughed workers is wound down between August and October."

The government has paid 80% of wages, up to £2,500 a month, for workers laid off temporarily during the Covid-19 crisis in an attempt to reduce job losses from the economic shock. Almost 9m people are off work under the scheme but Chancellor Rishi Sunak is phasing out support by requiring employers to contribute more before ending support in October.

Many economists predict wide-scale job losses after economic output fell at a record rate. Companies face a slump in demand exacerbated by social distancing rules that reduce the number of customers that shops, airlines and other businesses can serve.

Since May, large UK companies have announced tens of thousands of job cuts including 5,000 at British Gas owner Centrica, 2,500 at Travis Perkins and more than 1,000 at Jaguar Land Rover.

The Trades Union Congress said the government should work with unions and businesses to battle unemployment and prevent life chances being undermined by long-term joblessness.

Frances O'Grady, the TUC's general secretary, said: “The labour market is on red alert. “The plan for recovery has to prioritise protecting and creating jobs. Getting people back into work is the only way out of recession. We need a job guarantee scheme to help those who lose work, especially young workers.”