Employment drops sharply in April despite government support to protect jobs

  • Video report by ITV News Business and Economics Editor Joel Hills

The “headline” rate of unemployment in the UK inched up to 3.9% between January and the end of March.

This seems remarkable, given the huge collapse in economic activity that we know occurred after the lockdown began on March 23, but that number does not capture the full force of the impact of Covid-19 on the labour market.

The Office for National Statistics' (ONS) data shows that in the week before the lockdown began and the week afterwards there was no major change in the level of either employment or unemployment but the number of hours worked dropped by 25%.

  • Business and Economics Editor Joel Hills explains impact of Government's job retention scheme

Credit: ONS

These numbers underline what already seemed clear: that the government’s Job Retention Scheme has been extremely effective at persuading companies to hold onto their staff even in the teeth of a severe downturn.

More than eight million jobs have been furloughed so far and 1.1 million people have accessed help under the Self-Employment Income Support Scheme but the more timely ONS data for April published suggests that a sharp rise in unemployment is underway, nonetheless.

The number of people in paid employment in April stood at 28.6 million - a fall of 457,000 on the previous month.

These numbers are based on tax records.

Credit: ONS

They capture the number of employees on company payrolls and paying PAYE, they do not include the self-employed.

The ONS says they are based on “early estimates” and are subject to revision, but they are a reliable source of information and can be taken as a pretty faithful record of what happened.

Credit: ONS

The number of people claiming benefits also surged in April to 2.1 million, although we already knew this and it is still not clear how many of these were out of work as opposed to seeking compensation for lost income or hours.

The number of vacancies in the economy also shrank significantly, falling from 755,000 in March to 351,000 in April.

That’s a record monthly fall and larger than the decline during the last recession.

Credit: ONS

Average weekly pay fell by £55, once again suggesting that government support has been succeeded in protecting the average person in work from a rather devastating fall in earnings.

The government will understandably see these figures as evidence that the steps they took to cushion households from what looks like the worst recession in living memory have been effective.

But they also point to a very sharp rise in the number of people out of work.

The direction of travel is clear.

What happens next depends in large part to how soon a recovery begins, how strong it proves and how successful the government’s Job Retention Scheme is in living up to its name.