UK employment at all-time high before lockdown

The UK employment rate reached a record high before social distancing and coronavirus lockdown measures forced the closure of the majority of workplaces.

Between December 2019 and February 2020, 76.6% of the working age population were in work, 0.4 percentage points higher than a year earlier and 0.2 percentage points up on the previous quarter, according to estimates from the Office for National Statistics.

However, there was also a marginal rise in unemployment to 4% – 0.1 percentage points higher than the previous quarter. Wages and job vacancies also fell.

The employment rate had been consistently growing for a number of years, but this is widely expected to have reversed in March and April as businesses shut their doors amid coronavirus restrictions.

Gerwyn Davies, senior labour market adviser at the CIPD, said the figures showed how strong the labour market had been before the lockdown, and urged the government to consider relaxing some of its furlough scheme restrictions to ensure it can recover quickly after the lockdown is lifted.

“The government has made the welcome decision to extend its job retention scheme to the end of June but now needs to make it more flexible to enable furloughed staff to work reduced hours. This change would enable employers to bring back workers from furlough gradually, which is likely to be necessary if lockdown measures are phased out over time. This would give the UK labour market a better chance of recovery once the initial phase of the crisis passes,” he said.

However, an additional spike in unemployment is also likely after the Coronavirus Job Retention Scheme support comes to an end, said Yael Selfin, chief economist at KPMG. Some 140,000 employers made claims for employee wage support within the first eight hours of the portal’s launch yesterday.

“The latest figures mask the extent of the rise in unemployment expected this year. We estimate that as many as 13 million jobs are in sectors highly affected by the lockdown, representing 36% of all jobs in the UK, which could see unemployment rising to just under 9% during the lockdown period,” said Selfin.

Tom Hadley, director of policy at the Recruitment and Employment Confederation, said: “Everything has changed since these statistics were collected.

“What today’s ONS figures do show is that the fundamentals of our jobs market are sound. This will help us to bounce back post-crisis. How quickly this happens depends on the steps government takes now to protect businesses. The package of support on offer is considerable but it needs to be accessible to businesses quickly to manage the cashflow crisis and protect jobs.”

“The inevitable impact of Covid-19 on the UK labour market can be seen in the REC’s Report on Jobs which shows the quickest drop in permanent and temporary staff placements since the global financial crash.”

CV-Library CEO Lee Biggins said the drop in vacancies at the beginning of the year suggested that employers were nervous about the impact Covid-19 would have even before the first social distancing measures were introduced.

“What we will see in the next few months is a real shift whereby candidates won’t hold as much power as they have done in recent years,” he said. “The unemployment rate is expected to soar and this is going to have a massive impact on our economy, especially as job numbers drop. Our own data shows that vacancies fell by 4.1% in Q1 2020 and this is likely to continue into the next quarter.”

There were 27.86 million paid employees (84.2% of all people in work) in December 2019- February 2020, an increase of 145,000 compared with a year earlier. Some 5.03 million were self-employed, 195,000 more than a year earlier.

Anton Roe, CEO at HR software outsourcing supplier MHR, said businesses needed to prepare now for how they will operate post-lockdown.

He said: “Companies will have to be careful and be ready for a return to lockdown and the effect that will have on recruitment and planning. They may have to be flexible enough to accommodate different levels of restriction or relaxation as society battles the coronavirus. Success will depend on how well they plan for this right now.
This will require a significant cultural adjustment by HR and managers, who will need to maintain productivity through more advanced connectivity and communication.

“The jobs market will certainly change but will vary significantly from sector to sector. In many areas, recruitment is likely to become slower as people stick with their current employer.

“The start-ups and restructured businesses that see out the downturn will need to access expertise in key function areas, such as HR, payroll, planning, enabling them to grow as rapidly as we need them to.”