UK Job Losses Accelerate After Government Support Wanes

By Harry Daniels
LiveSquawk News
@harry.daniels71

13 October 2020 / updated 15.50 GMT


LONDON – The state of play for UK households has worsened as Downing Street pulls the plug on measures designed to mitigate the pandemic’s impact on the country’s workforce, according to labour market data released Tuesday.

 

The majority of the latest report covers the period up to the beginning of September, and survey and tax data point to developing problems for workers.

 

The Office for National Statistics said the claimant count increased to 2.7mln in September, a measure that has more than doubled to 120.3pct since March.

 

The unemployment rate rose to 4.5pct to beat both the forecast of 4.3pct and the 4.1pct mark from last month. Employment fell by 153k and to far outpace the expected decline of -30k. These figures included August, the first month where the furlough scheme was scaled back.

 

ONS Deputy National Statistician for Economic Statistics Jonathan Athow said, “The latest monthly tax numbers show that the number of employees on the payroll was little changed in September. However, in total there were still nearly 700,000 fewer than in March, before the lockdown.

 

“Our newly adjusted survey figures show that in the latest period almost half a million fewer people were in work than just before the pandemic, while almost 200,000 others said they were employed but were currently not working nor earning any money.”

 

In August, the government began rolling back its furlough scheme. This coincided with a record increase in redundancies, which were up 114,000 on the quarter.

 

For the three-months to August, the ONS reported 488,000 vacancies, a record quarterly increase of 144,000 from the historic low in April-June 2020.

 

There were positives within the report as earnings recovered by more than expected. In the three months to August, the annual rate of pay growth was unchanged for total pay but 0.8pct higher for regular pay. 

 

Economist Sanjay Raja from Deutsche Bank posited, “With redundancies picking up to a post-Global Financial Crisis high, and the national furlough scheme slated to end in October, the likelihood of further job cuts remains high. We continue to think that the jobless rate could touch 7pct by year-end, though risks are tilted to a lower print given additional support provided to those areas under local lockdown.”