With the furlough scheme extended as well as vaccine rollout success, the UK labour market looks to have stabilised at the start of 2021 according to official data released by the Office for National Statistics (ONS).
Unemployment rate stood at 5 per cent in the three months to January, 0.1 percentage point higher than in the previous quarter but lower than the 5.2 per cent that economists had expected.
The number of employees on companies’ payrolls have increased slightly in February for a third consecutive month.
However, the employment rate fell 0.3 per cent to 75 per cent in the three months to January, and the economic inactivity rate increased to 21 per cent, 0.3 percentage points higher than the previous quarter.
The ONS said this was driven by more people saying they were inactive because they were students. “On the anniversary of the first lockdown, the jobs market is largely on ice as we await a proper recovery to get under way and the phasing out of the job retention scheme to reveal the extent of lasting labour market damage,” said Nye Cominetti, economist at the Resolution Foundation think-tank.
People under 25 account for the majority of the fall in payroll employment and Matthew Percival, people and skills director at the CBI business organisation, said the data reinforced the need to extend the government’s Kickstart scheme, which creates work placements for unemployed young people, for a further six months.
Redundancies were still running at about three times pre-pandemic levels, the data showed, while hiring remained deeply depressed.
On the figures released, Sharon Smith, Herefordshire & Worcestershire Chamber of Commerce, Chief Executive, said:
“The figures released by the ONS show just how important it was for government to extend the furlough scheme in the budget statement. Businesses are relying on this support to re-enforce issues they have around cash flow problems.”
“The importance of the vaccine rollout is also demonstrated in the figures released and government should be ensuring they do all they can to continue the amazing vaccine delivery programme and making sure there are no issues around the supply.”
Commenting on the ONS labour market statistics for March 2021, published today, BCC Head of Economics Suren Thiru said:
“While unemployment rose slightly, the continued uptick in the timelier payroll employment data indicates that the UK jobs market is becoming more resilient.
“Ongoing wage support, greater clarity provided by the government’s roadmap and the adaptations made by some firms to operate under lockdown restrictions helped support higher payroll employment in February.
“Extending furlough will limit the peak in job losses. However, with many firms struggling with the damage done to their cashflow by a year of covid restrictions, unemployment is likely to remain on an upward trajectory until well beyond a full reopening of the economy.
“While the extension to the job support schemes will protect millions of jobs and livelihoods, it is vital that those businesses and individuals who remain excluded from government support get the assistance they need to navigate a difficult period.”