UK Employment Declines Most Since Global Financial Crisis
UK employment declined the most since the global financial crisis of 2009 as the coronavirus pandemic took its toll on the labor market, data from the Office for National Statistics showed Tuesday.
As the lockdown and social distancing to curb the spread of the Covid-19 weighed on job creation, employment declined by 220,000 from the previous quarter to 32.92 million in the second quarter.
The employment rate dropped 0.2 percentage points to 76.4 percent in the June quarter.
In July, about 730,000 fewer people were in paid employment when compared with March, data showed.
The number of people out of work decreased 10,000 sequentially to 1.34 million in the three months to June. The unemployment rate was largely unchanged at 3.9 percent, while the rate was forecast to rise to 4.2 percent.
The government’s furlough program reduced the number of people looking for work. But the jobless rate is set to rise with the gradual withdrawal of the program.
The Bank of England has projected the jobless rate to rise materially, to around 7.5 percent by the end of the year.
Citing official data, Capital Economics said 9.6 million employees, or 29 percent of the workforce, were on the furlough scheme by August 2.
The firm still expects the unemployment rate to rise from 3.9 percent to a peak of 7.0 percent in mid-2021.
In the three months to June, total nominal pay fell 1.2 percent on the year and regular nominal pay dropped 0.2 percent. This was the first negative pay growth in regular nominal earnings since records began in 2001.
Further, data showed that hours worked continued to fall reaching record low. In the second quarter, actual weekly hours worked decreased by a record 191.3 million, or 18.4 percent, to 849.3 million hours. This was the largest quarterly decrease since estimates began in 1971.
In July, the claimant count increased by seasonally adjusted 94,400 from the previous month compared to economists’ forecast of 10,000.
The claimant count reached 2.7 million in July, an increase of 116.8 percent since March 2020.
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