Chancellor Rishi Sunak’s decision to extend the government’s furlough scheme for workers at companies hit by fresh coronavirus restrictions is aimed at avoiding mass unemployment in the UK over the winter.
But unemployment is still set to rise, partly because some businesses had already made job cuts in anticipation of government subsidies for wages becoming less generous.
The state of the labour market will be crucial to the fortunes of the UK economy, and the Financial Times has selected the most timely and representative data available to chart the fast-changing situation.
Some data are experimental and less comprehensive than official statistics, so conclusions should be drawn with caution. Charts will be updated as new figures are published.
November 18: A section about the labour market has been updated
Official data show limited rise in unemployment so far
Official data show the UK unemployment rate averaged 4.8 per cent over the three months to the end of September, up from 3.9 per cent a year earlier. This partly reflects a rise in redundancies and large numbers of self-employed people falling out of work.
But the bigger effect has been a slump in company hiring, which remained well below levels recorded before the Covid-19 pandemic, even after most businesses reopened following the UK’s spring lockdown.
Data from HM Revenue & Customs show the number of employees on company payrolls in October was 782,000 below pre-pandemic levels, mainly because the usual flow of people starting new jobs dried up during the lockdown and has not returned to normal.
Many jobs in danger as companies face drop in demand
Redundancy plans announced by big employers over recent months show that large-scale job cuts are under way, and are likely to drive a sharp rise in unemployment.
These announcements do not give a complete picture of where jobs are being lost, since they do not include cuts happening under the radar at privately owned companies and smaller businesses, but they serve as a guide to the sectors worst affected.
Almost all industries have been affected, but some of the biggest job cuts have come in the aviation, hospitality and retail industries, reflecting government restrictions on travel, the impact of social distancing measures and the lack of office workers in city centres.
However, job losses in the run-up to the original scheduled end of the furlough scheme, which had been due to expire on October 31 but is now extended until March, were not as bad as feared. There was a trickle rather than a flood of job cuts announced by major employers in recent weeks.
Jobs put at risk during the coronavirus crisis
The table below shows a selection of companies that have made announcements about job cuts or statements putting roles at risk since the UK coronavirus lockdown took effect on March 23. Not all the announcements are related to Covid-19.
The information includes UK-based companies that have outlined plans for job cuts, as well as overseas groups that have unveiled proposals for redundancies in Britain.
The table is not intended to be comprehensive but it is meant to show the most recent figures for jobs at risk at the companies included. The Financial Times is aiming to update the table throughout the pandemic.
Entries marked *include jobs at risk outside the UK.
Furlough extension is not a panacea
The extension of the furlough scheme, covering 80 per cent of employees’ wages, will soften the blow of the latest coronavirus restrictions, including the lockdown in England that began on November 5.
The scheme is open to all staff who were on company payrolls on October 31, not just the roughly 2m who were furloughed at the end of last month.
However, some workers were laid off in the run-up to the scheme’s original scheduled end on October 31. Employers may be able to rehire and re-furlough these employees, but if they have already incurred the costs of paid notice periods and are struggling to survive the Covid-19 restrictions, may feel unable to do so.
Moreover, some companies that had gone to great lengths to avoid job cuts, such as bakery chain Greggs, have said the sales hit from the latest restrictions makes redundancies unavoidable.
Restrictions may choke off recent rise in hiring
Company hiring picked up steadily over the autumn, with the number of online job adverts reaching 70 per cent of average 2019 levels by late October before tailing off ahead of the second lockdown in England.
Some of the rise may reflect pre-Christmas hiring. There is also a stark difference between sectors, with vacancies in social care close to 2019 levels, while in hospitality they are well below half last year’s average.
With recruitment companies reporting large numbers of people chasing each vacancy, and social distancing restrictions set to linger even when England’s lockdown lifts, hiring looks unlikely to keep pace with rising unemployment over the coming months.
Outlook is much bleaker in large cities
On all measures, the outlook for the labour market is much bleaker in the UK’s largest cities, London especially, where the absence of office workers has had a chilling effect.
Compared with other parts of the UK, the capital has seen a higher proportion of workers placed on the furlough scheme, a sharper drop in the number of job vacancies and a bigger rise in work-related benefit claims.
With the latest ONS survey data showing homeworking back at levels last seen in July, the prospects for city-centre businesses look poor for the time being.
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