Coronavirus UK: Unemployment hits 1.35m despite furlough scheme

The number of people claiming benefits has soared by a record 856,500 to 2.1million in the first full month of the coronavirus lockdown – despite the furlough scheme keeping millions in work.  

The Office for National Statistics (ONS) said that claims under Universal Credit sky-rocketed by 69 per cent in April, as the country begins easing out of the draconian lockdown measures imposed in late-March.

Today’s newly released figures also revealed that unemployment jumped by 50,000 to 1.35 million in the three months to March.

The dire numbers come despite Chancellor Rishi Sunak’s job retention scheme that currently has 7.5 million people on furlough in efforts to prop up the economy during the pandemic.

Without the scheme, designed to help employers keep staff during the crisis, the benefits claims would likely be significantly higher. 

Thousands of people have started making their way back to work this week after the Prime Minister eased lockdown restrictions last Sunday. 

Mr Johnson emphasised last week he wants to kickstart the economy and get back to work, after dire forecasts last week that saw the economy shrink by 2 per cent. 

It also announced that early estimates for April 2020 indicate that the number of paid employees fell by 1.6 per compared to March, as firms began to feel a greater impact from the lockdown.

Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: ‘While only covering the first weeks of restrictions, our figures show Covid-19 is having a major impact on the labour market.

‘In March employment held up well, as furloughed workers still count as employed, but hours worked fell sharply in late March, especially in sectors such as hospitality and construction.

‘Through April, though, there were signs of falling employment as real-time tax data show the number of employees on companies’ payrolls fell noticeably, and vacancies were sharply down too, with hospitality again falling steepest.’ 

You are able to claim for universal credit if you’re on a low income, out of work or you cannot work.

Minister for Employment Mims Davies said: ‘Clearly these figures are behind on our current struggle but the impact of this global health emergency is now starting to show – and we’re doing everything we can to protect jobs and livelihoods.

‘What these statistics do highlight is that heading into the pandemic, we had built strong foundations in our economy, which will be crucial as we gradually move forward as the lockdown eases and look to bounce back.’ 

It comes as a new study today suggests that young and older workers across Britain are being hardest hit when it comes to reductions in pay during the coronavirus crisis. 

Meanwhile older workers, who are also seeing their pay cut, are facing the added risk of being of becoming involuntary retired before their pension age, the research suggests. 

The report, from think-tank the Resolution Foundation, warned wage reductions and job losses could hit the incomes of some workers in younger and older age brackets permanently, with younger workers facing the misery of having their pay being scarred for years to come.

One charity described the findings as ‘concerning’ and warned it could have ‘worrying ramifications for young people’s longer term health outcomes’.  

The Resolution Foundation said more than one in three 18 to 24-year-olds, and three in 10 workers in their early 60s, are receiving less pay than they did at the start of the year. 

This compares with less than a quarter of workers aged 35 to 49.

The report is based on a survey of more than 6,000 UK adults between May 6 and 11, supported by charity the Health Foundation.

The Foundation said employees across all age groups are more likely to be earning less than they did in January than earning more, though young and older workers are most affected.

Among 18 to 24-year-olds, 35 per cent are earning less than they did before the outbreak, and 13 per cent are earning more.

Employees in their early 60s are the next most likely to be receiving less pay (30 per cent), with a further 9 per cent receiving more pay.

By contrast, 23 per cent of 35 to 49-year-olds are earning less, while 5 per cent are earning more, the report found.

Young people are the most likely to have lost work, with almost a quarter being furloughed and around one in ten losing their jobs completely, the research suggests.

Nearly a fifth (18 per cent) of workers in their early 60s have either lost their jobs or been furloughed, according to the survey. 

The Foundation said the scale of pay reductions since the crisis would be even greater were it not for the Job Retention Scheme. 

The foundation, whose work focused on improving the living standards of those on low to middle incomes, said the Government needs to start preparing its response to the next phase of the crisis, which should include broader measures to boost demand in the economy and raise household incomes. 

Maja Gustafsson, a researcher at the Resolution Foundation, said: ‘While young people are in the eye of the storm, they are not the only group who are experiencing big income shocks.

‘Britain is experiencing a U-shaped living standards crisis, with workers in their early 60s also badly affected.

‘That is why the Government’s strategy to support the recovery should combine targeted support to help young people into work, with more general stimulus to boost demand across the economy and help households of all ages.’

Martina Kane, from the Health Foundation, said: ‘It is concerning that the current crisis is disproportionately affecting employment opportunities for young people.

‘This could have worrying ramifications for young people’s longer term health outcomes.

‘There is strong evidence that unemployment and poor quality work can have a negative impact on young people’s mental health. Financial insecurity can result in poor health both now and later in life.’