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More job cuts forecast as UK payroll reduced by 695,000 during lockdown

By JONATHAN POWELL in London | China Daily Global | Updated: 2020-09-16 10:04

A person wearing a protective face mask walks past a Job Centre Plus office, amidst the outbreak of the coronavirus disease (COVID-19) in London, Britain, Aug 11, 2020. [Photo/Agencies]

The number of employees in the United Kingdom on payrolls fell by 695,000 between March and August, with latest official figures showing the summer reopening of the economy after the lockdown has not boosted the job market significantly.

Data from the Office for National Statistics, also known as the ONS, shows the nation's unemployment rate increased for the first time since restrictions were introduced in March, and bigger job losses could be ahead as the government's huge furlough program expires next month.

The unemployment rate increased to 4.1 percent in the three months to July from 3.9 percent in early 2020. Reuters reported that the furlough program has shielded millions of workers and there were fewer job losses than feared in the figures, though the Bank of England has forecast that the unemployment rate will hit 7.5 percent at the end of this year.

The ONS's stats also reveal that young people have taken the heaviest jobs hit from the virus, with employment of 16 to 24-year-olds down by about 150,000 since March. The oldest workers also saw an employment hit.

In contrast, there was a combined increase of 236,000 on the quarter for those aged 25 to 64 years to 28.07 million, with a record increase of 67,000 for women in the 25 to 34 years age group.

The ONS data estimates that around 2 million workers returned from furlough in July, but more than 5 million workers were still temporarily away from their workplace in July, with half away more than three months.

Analysts say the figures show the scaling back of Britain's furlough support has not yet hurt employment, though Samuel Tombs from Pantheon Macroeconomics said "a sharp downturn remains in motion".

Tombs, quoted in the Daily Telegraph, said job losses were likely to accelerate in September and October when employers will have to pay more toward the cost of the furlough program.

The BBC reported that employers in Britain are planning more than twice as many redundancies than they did at the peak of the last recession in 2009.

New figures obtained from the Institute for Employment Studies, or IES, show that 735,000 redundancies are expected by the autumn.

In comparison, the report said about 180,000 job cuts were planned from January to March 2009, while 380,000 were planned from May to July this year.

"Comparing what is happening now with what was happening in the last recession shows us we are experiencing a jobs crisis unlike anything we have seen before," said Tony Wilson, director of the IES.

The government has set out support measures with its "Plan for Jobs" that urges employers to create new training placements and apprenticeships, extra work coaches in job centers, and a 1,000-pound ($1,288) incentive to encourage companies to bring staff back from furlough.

"We want the government to step up urgently now," Frances O'Grady, general secretary of the Trades Union Congress, told BBC radio.

"Sadly the pandemic isn't scheduled to end in October, nor should the support for jobs and livelihoods."

In response to the ONS data, Chancellor of the Exchequer Rishi Sunak said protecting jobs and helping people back into work was his "number one priority".

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