UK jobs fall by largest number since 2009 crisis

It’s leading up to a major jobs crisis in the UK with employment dropping by the largest amount, in the second quarter, since the aftermath of the global financial crisis, according to the Office for National statistics (ONS). Employment decreased by 220,000 on the quarter, in what was the largest quarterly decrease since May to July 2009. There were 730,000 fewer people on company payroll in July compared with March, before the Covid-19 lockdown.

The ONS said: “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. This 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.”

A large number are estimated to be temporarily away from work, including approximately 7.5 million on furlough in June, with more than 3 million of these being away for three months or longer. “The survey shows 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 ONS said.

Senior labour market advisor for the Chartered Institute of Personnel and Development (CIPD), Gerwyn Davies, said the figures were “disappointing in many respects”. He said: “The sharp fall in employment highlights a dramatic deterioration for the employment prospects of young people, part-time workers and older workers in particular.”

Until now, huge drops in unemployment had been masked by the government’s Job Retention scheme. Debapratim De, senior economist at Deloitte, said that the “furlough scheme has continued to keep the UK’s unemployment rate in check”. However, with the emergency Covid-19 support coming to an end in October, another surge of job cuts could be imminent. Davies warned that the “real concern” is that this was just the “first wave of bad news for the job markets.”

Davies said: “The fact that reduced hiring rather than increased firing of permanent staff is the main cause of the jobs showdown to date bodes ill for the coming months if more employers turn to redundancies as a last resort.” Peter Schaffrik and team, analysts at RBC Capital Markets, said in a note recently: “From July onwards the government’s furlough scheme is beginning to be wound down so these labour market indicators should deteriorate further in coming months.”

CIPD released a survey of 2,000 businesses that found a third of UK businesses plan to cut jobs from July to September. The level of cuts is likely to be more severe in the private sector, the report found, with twice as many private-sector employers expecting to make redundancies, compared with the public sector.

Among the most significant recent announcements of job cuts were from retail giants Marks & Spencer and Debenham who plan to reduce staff by 7,000 and 2,500 respectively. NatWest Bank plan to cut 550 jobs with intentions of moving away from branches to a more digital strategy. The bank will be looking for branch managers and personal bankers to leave voluntarily. “We have to respond to changing customer behaviour and the rising customer demand for digital banking services,” a spokeswoman for the bank said.

She added: “We have taken the decision to invite applications for voluntary redundancy and will support those colleagues who apply with a comprehensive support package. There will be no compulsory redundancy as a result of this announcement. Our ways of working had been evolving, even before the coronavirus pandemic. We have been reviewing our London property strategy to better reflect how we will work in the future”.

(The writer is our foreign correspondent based in the UK.)