UK Employment Figures, July 2020: The Labour Market Is Getting Ugly
Mounting job losses and lack of vacancies signal looming unemployment crisis.
Interpreting the Office for National Statistics’ labour market data right now can be confusing. This largely reflects a combination of the government’s job retention scheme and the fact that some headline indicators such as the unemployment rate — which has stayed flat since the start of the year at 3.9% — are backward looking.
The ONS rightly highlights other data series as a more accurate guide in these unusual times; these paint a bleak picture. Early employment estimates based on Pay As You Earn tax records signal a 650,000 drop between March and June. Weekly hours worked fell by a record 5.5 hours on the year to an all-time low of 26.6. Pay fell on most measures, particularly in furlough-heavy sectors such as accommodation and food services.
Job vacancies in the three months to June 2020 were at a record low of 333,000, albeit there was a small uptick in the single month June vacancies estimate. That tallies with online job postings data from Indeed UK, which have stabilised in recent weeks but continue to run almost -60% down on last year’s trend as of 10th July.
The big question is what happens next as the furlough scheme is unwound between now and the end of October. What is clear is that with vacancies down, benefit claimants up and a slew of companies announcing redundancies, we’re on the verge of an unemployment crisis. Overall, there will be more candidates per position, meaning for employers it’s easier to hire, but for jobseekers it’s harder to find a job. This is a complete turnaround from conditions before the crisis hit, when we had the tightest labour market in living memory.
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.