London: The UK jobless claims more than doubled to almost 3 million during the virus lockdown, adding urgency to the Bank of England and government’s efforts to cushion the blow.
The number of people seeking unemployment benefits increased by more than 1.5 million in the two months through May, the Office for National Statistics said. The figures show the brutal toll being taken by the virtual shuttering of the economy since March 23, with the country now mired in what could be its deepest slump for 300 years.
Separate figures showed wage growth slowed to the weakest since 2014.
Pressure mounts for more stimulus
It leaves Prime Minister Boris Johnson and the Bank of England under increasing pressure to do more to support the recovery after data last week showed the economy shrank by a fifth in April. BoE policymakers are expected to announce a further expansion of their asset-purchase programme this week, while the government is set to unveil its plans to boost growth in coming weeks.
Despite best attempts
In April alone, employment dropped 429,000, the most in over six years, even as the government’s furlough programme protected millions of jobs.
The ONS said there were some signs of stabilization, with Adzooma data showing vacancies picking up slightly in early June to 45.6 per cent of the 2019 average. That increase is expected to be reflected in official estimates published next month.
In the three months through May, vacancies plunged by a record 342,000, with the retail and hospitality sectors posting the biggest declines.
Shocking as the labor data are, they would have far worse had the government not taken unprecedented action to keep people in their jobs. The taxpayer is now paying the wages for more than 11 million jobs in an effort to prevent a wave of mass unemployment over the summer.
“We still expect unemployment to increase later this quarter and caution that Q2-20 may not mark the peak – there’s a significant risk of a second wave of redundancies between August and October as the government’s furlough programme is wound down,” said Dan Hanson, analyst.
The slowdown in pay growth, to just 1 per cent in the latest three months, reflects the fact that furloughed employees are receiving only 80 per cent of their wages under the Job Retention Scheme.
The government’s furlough program is due to run until the end of October and could cost as much as 60 billion pounds, while a similar plan for the self-employed will add more to the cost. Companies fearing a bleak future are shedding jobs nonetheless, and economists say the jobless rate could reach as high as 10 per cent in the second quarter – a rate not since since the mid-1990s.