ONS Unemployment Figures Are Masking The Real Picture

UNEMPLOYMENT - Early indicators for July 2020 suggest that the number of employees in the UK on payrolls is down around 730,000 compared with March 2020. Flows analysis suggests that the falls in May, June and July are mainly because of fewer people moving into payrolled employment. People out of work are largly being classesed as economically inactive. “There are over 8 million people, that's 20% of the workforce aged between 16 and 64 in the UK who are economically inactive. However that figure was taken earlier in the year. 

Zero-hour contracts have topped a million as benefits surge. 

Survey data show employment is weakening and unemployment is largely unchanged because of increases in economic inactivity, with people out of work but not currently looking for work.

The decrease in employment on the quarter was the largest quarterly decrease since May to July 2009 with both men and women seeing decreases on the quarter. The quarterly decrease in employment was also driven by workers aged 65 years and over, the self-employed and part-time workers. Meanwhile full-time employees largely offset the decrease.

Hours worked has continued to fall reaching record lows both on the year and on the quarter.

A large number of people are estimated to be temporarily away from work, including furloughed workers; approximately 7.5 million in June 2020 with over 3 million of these being away for three months or more. New analysis shows that the youngest workers, oldest workers and those in manual or elementary occupations were those most likely to be temporarily away from paid work during the coronavirus (COVID-19) pandemic. There were also around 300,000 people away from work because of the pandemic and receiving no pay in June 2020.

Vacancies are showing increases in the latest period, driven by the smaller businesses, some of which are reporting taking on additional staff to meet COVID-19 guidelines.

The Claimant Count reached 2.7 million in July 2020, an increase of 116.8% since March 2020.

Pay fell for all measures in the three months to June 2020. However, for the sectors of wholesaling, retailing, hotels and restaurants and construction where the highest percentage of employees returned to work from furlough, there is a slight improvement in pay growth for June 2020.

• April to June figures show weakening employment rates, with numbers of self-employed and part-time workers seeing reductions; despite these falls, unemployment was not rising, because of increases in people out of work but not currently looking for work; the reduction in total hours worked is a record both on the year and on the quarter, with the whole period covering a time since the introduction of coronavirus measures.
• Early estimates for July 2020 from Pay As You Earn (PAYE) Real Time Information (RTI) indicate that the number of payroll employees fell by 2.5% (730,000) compared with March 2020.
• The Claimant Count increased in July 2020, reaching 2.7 million; this includes both those working with low income or hours and those who are not working.
• Vacancies in the UK in May to July 2020 were at an estimated 370,000; this is 10% higher than the record low in April to June 2020.
• The three months to June 2020 saw strong falls in pay; total nominal pay fell by 1.2% on the year and regular nominal pay fell by 0.2% (the first negative pay growth in regular nominal earnings since records began in 2001).

ABC Note: The economically inactive are defined as people who are not in employment or unemployed. There are many reasons why an individual may be inactive, for example, they might be studying, looking after family or long-term sick. Or furloughed. 

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