Unemployment falls below 5% despite lockdown

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UK unemployment fell to 4.9% in the three months to the end of February even though much of the economy has been locked down, official statistics have revealed.

Labour market data from the Office for National Statistics recorded the drop, the first decline since 2019. The UK unemployment rate was 4.9%, 0.9 percentage points higher than one year earlier but 0.1 percentage points lower than the previous quarter. London was worst affected with a rate of 7.2%; the South East was least affected (3.4%).

The proportion of of people in work (the employment rate) was estimated at 75.1%, 1.4 percentage points lower than a year earlier and 0.1 percentage points lower than the previous quarter. The redundancy rate for the latest quarter was estimated at 7.3 people per 1,000 employees, down from the high of 14.2 in the previous quarter.

Separate figures from HM Revenue and Customs last month showed that 4.7 million jobs were still furloughed at the end of February.

Younger workers, especially those working in hospitality and retail, have borne the brunt of the lockdown with under-35s accounting for four out of five people no longer on the payroll.

Gerwyn Davies, senior policy adviser at the CIPD, said the number of young people in employment had fallen to a post-pandemic low. “This reinforces the urgent case for apprenticeship incentives to be made more generous and targeted specifically at 18-24 year-olds. It also underlines the need to improve employers’ awareness of traineeships and the Kickstart scheme.”

Jonathan Reynolds, shadow work and pensions secretary, said: “Unemployment is persistently high yet the government’s programmes to get people back into work are still not up and running. These figures show more than half of the people losing their employment were under-25 but the Conservative’s struggling Kickstart scheme has created just 6,000 jobs.”

There were an estimated 607,000 vacancies in January 2021 to March 2021. This is 178,000 (22.7%) fewer than a year earlier, immediately before the start of Covid-19 social distancing measures. The increase in vacancies over the latest quarter was 17,000, a six consecutive month in which quarterly figures have slowed from the 165,000 increase in September 2020.

Matt Weston, managing director of recruiter Robert Half, said: “The latest labour market figures only partially reflect the scale of the pandemic’s impact on employment levels, and the outlook for employment as the furlough scheme remains in place across the UK to support jobs. It is clear the UK’s unemployment rate would be far higher should the job retention scheme come to an end overnight.”

Recruitment and Employment Confederation chief executive Neil Carberry said: “These figures show continued resilience in the labour market despite the winter lockdown. The unemployment rate was lower than the previous quarter – reflecting an upturn in hiring, as REC surveys and today’s vacancies numbers suggest. The number of temporary workers was up by 5.4% on the previous quarter, yet again demonstrating the huge importance of temporary work helping to maintain a strong labour market despite the pandemic. The role of temporary work in supporting incomes has been a constant of the pandemic.

“We now need to look to how we support this recovery. A reform of the apprenticeship levy to support retraining for older workers and opportunity for younger workers – who have been particularly hard hit – is now essential.”

The government today announced a consultation into its proposed ‘flexible’ apprenticeships, which will enable apprentices to gain work placements across a range of projects and employers in the same industry.

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