UK Employment Figures, June 2020: Slump in Vacancies Show Hit to Labour Market After Lockdown
The tight labour market is over.
The latest Office for National Statistics figures show the depths the jobs market plunged after lockdown. With vacancies falling to a record low in May, the claimant count soaring and over nine million jobs having been furloughed at some point since March, the signs point to a labour market in retreat with swathes of workers’ wages mainly paid for by the government.
The ONS vacancies series shows a -60% drop since February, to 318,000 in May on the single month measure. That mirrors the decline we’ve seen in job postings on Indeed, which are running -61% below last year’s trend as of 12 June.
Official unemployment remains low, held down by the large numbers of workers placed on furlough, but benefits claims and hours worked show some impact from Covid-19. The claimant count has jumped to 2.8 million, up 1.6 million since March, though this is not a true measure of unemployment, as it also includes some people on low pay or hours who are eligible for unemployment-related benefits.
April saw a record 8.9% year-over-year (y/y) fall in hours worked, with accommodation and food services seeing the biggest fall in hours. Fewer hours and pay cuts among those on furlough translated into lower average weekly pay. Total pay growth for employees dropped 1.3 percentage points to 1.0% y/y in the three months to April, with real terms pay turning negative at -0.3% y/y.
The big question is what happens next. With government wage subsidies tapering over the summer and autumn, further layoff announcements are expected following the slew of layoffs that have already been announced. This may lead to a large increase in unemployment at a time when vacancies have dropped to a record low. The tight labour market is over.
Jack is an Economist on the Indeed Hiring Lab who focuses on the UK/Ireland labour market. Before joining Indeed, Jack was a senior economist at Nationwide Building Society and prior to that at global information provider IHS Markit. He holds an MSc in finance and economic policy from SOAS, University of London and a BSc in economics and finance from the University of York.