These are fast-moving times. The latest official unemployment figures tell us what was happening to the UK labour market in the autumn and they already have a historical feel about them. Since the jobless rate hit a four-year high of 5%, restrictions on the economy have been loosened and then reimposed even more stringently. A mass vaccination programme has got under way.
Even so, there are four key messages from the unemployment statistics.
The first is that the jobs market is sensitive to the tightening or easing of the lockdown. Last summer, when there was hope for a while that the crisis might be over, the number of job vacancies rose but the recovery in vacancies slowed towards the end of 2020 when the second wave of the pandemic arrived. On a more positive note, the number of employees on payrolls increased by 55,000 in December, the period between the end of the four-week lockdown in England and a new national lockdown being imposed.
The second is the importance of the government’s coronavirus job retention scheme, which has kept the rise in unemployment in check. To be sure, the number of people in payrolled employment is 828,000 lower than it was in February last year and the official jobless rate has risen from 3.8% to 5%, but the picture would have been a lot worse without the furlough. In the recessions of the early 1980s and 1990s, the unemployment rate exceeded 10%.
The third message is that the job losses have tended to be concentrated in specific low-wage sectors of the economy, such as hospitality and tourism, and in parts of the country where those sectors account for a high proportion of jobs, such as London. Annual earnings growth has picked up to 3.6% because higher-paid workers have tended to remain in full-time employment while the axe has fallen on people working in pubs, restaurants and bricks-and-mortar retail.
The final message is that there is the risk of further job losses unless the exit from the furlough is handled with care. Rishi Sunak, the chancellor, has announced that wage subsidies will be maintained until the end of April but he is under pressure from the CBI and other employers’ groups to extend it into the summer so that continued support can be provided to vulnerable parts of the economy.
In an ideal world this would not be necessary because the vaccines would allow restrictions to be lifted and the employment outlook would brighten as those currently stuck at home spent the savings they have accumulated on eating out and holidays. That, though, was also the hope last summer. Things don’t always go according to plan.
