The Office for National Statistics (ONS) said today (11/08) that the number of people in work decreased by 220,000 between April and June.
This was the largest quarterly decrease since the height of the financial crisis. The groups most affected are younger workers and those in less skilled jobs.
This number would have undoubtedly been higher if not for the Job Retention Scheme which has seen close to 9 million jobs saved. It is the worry of many that come October when the scheme closes we will see a cliff edge with some experts reporting unemployment could rise to around 7% next year due to businesses facing increased costs, reduced demand and diminished cash reserves.
The Chamber’s recently released Quarter Economic Report for Quarter 2 of 2020, in partnership with the Worcestershire Local Enterprise Partnership supports the ONS’s statement and revealed that within the next 3 months 31% of businesses in Herefordshire & Worcestershire expected to reduce their work force. This is the largest percentage since quarter 4 of 2008 when 38% of businesses expected a decrease.
A significant spike in job loses would mean a major setback to recovery operations reducing consumer spending and having a negative impact on the capacity of the UK economy.
Commenting on the ONS labour market figures for August 2020, published today, BCC Head of Economics Suren Thiru said:
“While the headline data continues to lag behind the reality on the ground, the decline in the number of employees on payrolls and hours worked is further evidence of the damage being done to the UK labour market by the Coronavirus pandemic.
“The furlough scheme has been successful in preserving millions of jobs. However, with firms continuing to face a perfect storm of increased costs, reduced demand, and diminished cash reserves, unemployment is likely to surge as the government support schemes wind down, unless action is taken.
“A significant spike in job losses would be a major drag on any recovery, stifling consumer spending and reducing the productive capacity of the UK economy.
“To help businesses recruit and retain staff, more needs to be done to reduce the overall cost of employment and prevent substantial redundancies. This could include significant expansion of the Employment Allowance and a cut in employer National Insurance Contributions.”
For a more detailed insight into the local business economy and the impact that the Coronavirus Crisis has had please do read the full report found here www.hwchamber.co.uk/wp-content/uploads/2020/08/QES_Q2-2020-LR-singles.pdf.
For further information on the help and support available to your business I would urge all businesses to visit our Coronavirus Business Support Hub here www.hwchamber.co.uk/support/advice/coronavirus-information.