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Cracks are beginning to show in the labour market, says Deloitte

Sep 15
 
Tags: Deloitte
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Cracks are beginning to show in the labour market...

The latest labour market figures have just been released by the Office for National Statistics (ONS) and despite the fact that July saw many areas starting to reopen in the wake of lockdown, unemployment grew.

What this says about the jobless rate and how it’s likely to increase further when the government’s salary-support scheme comes to an end in the autumn is very telling.

Debapratim De, senior economist at Deloitte, said: “The furlough scheme has been very effective in cushioning the blow from the pandemic to the labour market. But cracks are beginning to show, with unemployment rising – particularly among younger workers - and redundancies hitting their highest level in almost eight years.

“Although growth has bounced back in the third quarter, the recovery is likely to be slow and uneven, with a sharp rise in unemployment almost unavoidable once the furlough scheme ends.”

A rise of 104,000 people were unemployed in the three months up to July, putting the total at 1.4 million. This is an increase of 0.2 percentage points, bringing the overall proportion to 4.1 per cent and the biggest increase seen so far since the beginning of the pandemic.

With a number of key areas of the economy reopening, many people who had been furloughed or working from home could return to work. This is thought to equate to around two million people.

The Job Retention Scheme, which was launched at the beginning of lockdown, helped keep nearly ten million employees on the payroll. It comes to an end on October 31st and already, some companies have started to lay off staff.

Further figures from the ONS suggest that 36,000 members of staff were let go from private firms in August. Many economists believe the unemployment rate could stand at eight per cent by the end of the year.

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