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UK suffers biggest drop in employment in over a decade

Job Centre - Image credit: PA Images

UK suffers biggest drop in employment in over a decade

The UK has suffered its biggest drop in employment for over a decade, according to figures released today by the Office for National Statistics (ONS).

Employment decreased by 220,000 from May to July, the largest drop since May to July 2009, at the height of the financial crisis.

The latest Office for National Statistics data estimates unemployment across the UK was at 3.9 per cent between May and July.

Scotland’s unemployment rate remains above the UK average at 4.5 per cent, an increase of 0.4 percentage points on the previous quarter and 0.8 points compared to the same period the previous year.

Unemployment has not surged as much as expected as firms make use of the UK Government’s furlough scheme. 

But the data shows that 730,000 fewer people were in paid employment in July than in March, when the UK’s coronavirus lockdown began.

Redundancies increased by 27,000 on the quarter, rising to 134,000, the highest level since February to April 2013 – although the ONS said this remained “well below that seen during the 2008 downturn”.

Meanwhile the claimant count, which measures the number of people claiming benefits aimed at helping the unemployed, rose by 3.6 per cent between June and July, with another 94,400 people seeking help. 

The claimant count has increased by 116.8 per cent – or 1.4million – since March.

The figures show the fall in employment was mainly driven by a drop in self-employment.

Young and older workers, the self-employed and low skilled and part-time workers have been particularly hard-hit by the squeeze on jobs.

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.”

Minister for Business, Fair Work and Skills Jamie Hepburn said: “For the period April to June 2020, Scotland’s employment rate estimate fell over the quarter to 74.3 per cent and the unemployment rate estimate rose over the quarter to 4.5 per cent.

“These statistics cover a full three months of lockdown measures before some businesses started to re-open, but still do not reflect the full impact of the pandemic on the labour market as the Job Retention Scheme is continuing to help support many people remain in employment.

“We continue to call on the UK Government to extend the Job Retention Scheme, particularly for those hardest hit sectors, for example travel, tourism and hospitality, which face significant long-term challenges likely to remain when the scheme ends in October.

“We have provided a package of support to businesses that totals over £2.3 billion to keep companies in business and people in jobs.

“This provides long-term certainty for those affected by the coronavirus (COVID-19) pandemic.

“However, we also need to ensure support for those who have already lost, or are at risk of losing, their job, and those looking for work and have already committed a further £100 million for employability and training support.

“This includes Scotland’s Youth Guarantee supported by at least £50 million in recognition of the need to protect employment for young people during this crisis.

“It’s also clear that with the lockdown in place, many companies have not been able to take on new apprentices.

“As the economy reopens, we will do what we can to support those apprentices who are made redundant and encourage companies to look to the future and take on new starts.

“Today, we’ve announced £10 million for a range of measures to recruit and retain apprentices and ensure that no one is left behind.”

Liz Cameron, chief executive of the Scottish Chambers of Commerce said: “These figures continue to show how the furlough scheme has prevented severe job losses during the pandemic.

“But the rise in unemployment points to the direction of travel as the restrictions imposed to prevent the spread of the virus start to cause real economic damage.

“It also points to the risks to livelihoods when the jobs support falls off a cliff edge in October.

“To help businesses recruit and retain staff, more needs to be done to reduce the overall cost of employment and prevent substantial redundancies.

“This could include significant expansion of the Employment Allowance and a cut in employer National Insurance Contributions.”

Andrew McRae, FSB’s Scotland policy chair, said: “Today’s stark statistics give us a taste of things to come, unless decision-makers intensify their efforts to rehabilitate the economy.

“At every turn, we must remember that these aren’t just numbers on a page but livelihoods lost. 

“We need to help local businesses create and sustain jobs.

“The Chancellor could look to keep additional costs low by – for instance – cutting employer national insurance contributions.

“And, while we understand the rationale for winding down the furlough scheme, the UK Government can’t take the option of some form of meaningful extension off the table if things turn from bad to worse.

“This crisis will see tens of thousands of people in Scotland lose their jobs and look for new opportunities.

“Our skills and education networks need to be prepared for a surge in people looking to upskill and retrain.

“Similarly, we need to support and encourage those self-starters prepared to use a change of circumstance as the catalyst they needed to start their own business.

“On both fronts, we’ll need nimble but considered policymaking from the Scottish Government.”

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Employment

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