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Look to hours worked for COVID-19 impact, says Deloitte

Jul 21
Tags: Deloitte
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Look to hours worked for COVID-19 impact...

The full effect of the COVID-19 pandemic has not yet been felt on unemployment figures, as wage support schemes continue to offer a crutch, economists warn. The latest report released by the Office for National Statistics (ONS) shows that the rate of unemployment was relatively steady in April, lulling the country into a false sense of security.

While the Coronavirus Job Retention Scheme has provided a buffer in the first few months of the pandemic, there are warning signs elsewhere. The number of hours actually worked dropped by nine per cent, benefit claims rose by 2.8 million and a distinct lack of vacancies characterised the employment market.

Debapratim De, senior economist at Deloitte, said: “The UK’s headline unemployment figure remains broadly unchanged. However with the furlough scheme in effect, the real impact of COVID-19 is reflected in weekly hours worked, which has seen the biggest fall on record.

“This, alongside the continued decline in payrolls and vacancies, suggest the fledgling economic recovery in May has had little to no effect on the labour market.”

Figures released by HMRC show that 9.1 million workers’ wages are being paid by the government’s furlough scheme. This equates to a quarter of the country’s workforce and while it's currently shielding the economic blow, it is set to come to an end in October.

Looking towards the future, it’s possible that unemployment could reach ten per cent, which is a situation that hasn’t been seen in the UK since the mid-1990s. With social distancing rules still in place and consumers lacking confidence, economists believe the worst is yet to come for the economy and employment levels will reflect this climate.

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