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UK Unemployment Figures Heading Towards 1970s Levels

The latest UK unemployment figures show a catastrophic loss of jobs in April, despite the government’s furlough scheme. 856,500 new claims were made by people who became unemployed in the month.

This has led to fears that the country could see a return to 1970s levels of unemployment this year.

The Numbers

The Office for National Statistics revealed a jump from 1.2 million people claiming benefits up to 2.1 million. This 70% jump was the biggest increase seen in a single month since records began, in 1971.

It also means that the current number of unemployed in Britain is at its highest level since 1996, which was the last time it reached over 2 million. This was just one of a series of figures that help to show the damage done to the country’s economy by the coronavirus lockdown.

Another statistic shows the number of hours worked in the first three months of 2020 fell by the highest amount in more than ten years, all before the full lockdown had even started.

More Details

The unemployment statistics show the vast number of people who started to claim either universal credit or jobseeker’s allowance benefits in April. However, there is some doubt over whether how many people at work whose income has dropped are included in the total.

At the moment, there are around seven and a half million employees who are getting paid 80% of their normal wages under the government’s scheme to protect jobs. Companies are using the debt collection process as one of the ways to avoid more serious issues.

The number of job vacancies being posted has also plummeted, with the total dropping by more than half. From 750,000 in March, the number fell to 351.000 in the month of April.

The start of April saw a further drop in job numbers, as 450,000 people lost their employment. Minister for Employment Mims Davies pointed out that the UK unemployment rate had fallen to 3.9% at the start of 2020, which was the lowest for several decades. The employment rate also climbed to a record of 76.6%.

It is feared that the growing number of people out of work could lead to a surge in eviction rates across the country. Polly Neate, the chief executive of Shelter, said that the government has to increase benefits, as tenants are only protected from eviction until June.

Another area of concern is that pay cuts are expected in the next few months. The NIESR think tank has revealed that the UK’s private sector is likely to be heavily affected. They suggest that the furlough scheme is currently leading to pay cuts rather than job losses.

The last few weeks in March saw 25% fewer hours worked than in the rest of the quarter. This was part of the reason why the median monthly wage was down by £55, leading to a figure of £1,789 in April.

Economists are still predicting a fairly speedy return to normality once the lockdown is fully over. However, the deeper the damage that is inflicted now, the longer it could take for the recovery to be completed.