Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, commented that “Generation Z has been hit particularly hard" by the impacted labour market.
Jane Imrie

695,000 fewer people in employment following COVID-19 crisis: businesses have their say

The Office for National Statistics (ONS) this morning unveiled that 695,000 fewer people in the UK were employed in August compared to March.

The COVID-19 crisis has resulted in a sharp rise of unemployment across the country since lockdown began.

Business leaders across the UK have reacted to the labour market news.

Jonathan Walker, assistant director of policy at North East England Chamber of Commerce

“With the labour market largely static over the summer, it is no great surprise to see the headline employment figures largely flat when compared to last month.

“Yet we know this masks tremendous uncertainty in our labour market. The reopening of the economy has seen firms largely bringing staff back from furlough rather than new recruitment.

“We also know that the winding down of the job retention scheme is likely to lead to significant redundancies in the months ahead. The continued rise in the claimant count is an early indicator of this.

“The need for immediate support for those sectors and individuals most at risk is clear. With the threat of local lockdowns looming large, employers in the areas of hospitality, culture and retail will be particularly exposed.”

Lee Biggins, CEO of CV-Library

“The UK employment rate is hanging by a thread and will continue to do so until the government’s Job Retention Scheme comes to an end.

“Sadly, today’s figures bring to light how many people have been impacted by the pandemic, and just how many jobs have been lost.

“There is hope, given that more people are returning to work after furlough and vacancies are picking back up.

“However, job numbers are nowhere near the levels they were at this time a year ago.

“With a second spike on the horizon, the outlook for the UK job market is unfortunately pretty bleak.”

David Morel, CEO of Tiger Recruitment

“The latest ONS figures point to a jobs market that is slowly starting to improve. Despite an increase in the unemployment rate and in the number of redundancies, vacancies rose in the period June to August, driven by smaller businesses.

“This is a pattern we have seen continue this month in our own business. After a quieter summer, with minimal new roles briefed into our office week on week, September has shown positive signs, with a 58.62% increase when comparing UK job vacancies between the first two weeks of September and the first two weeks of June.

“September is traditionally one of the busiest months in the recruitment sector so this is encouraging and reinforces my view that the recovery will be V-shaped.

“Whether this upward trend endures depends on a number of factors. If businesses are going to have a fighting chance of survival, it is vital that the government does not reimpose a national lockdown.

“If infection rates continue to rise, managing local lockdowns in a way that is sympathetic to businesses, particularly SMEs, will be essential.

“And the case for extending the furlough scheme is stronger than ever, to help those businesses hardest hit by the pandemic get back on their feet, back to activity and, eventually, back to hiring.

“The green shoots of jobs recovery are beginning to appear. We now need the right government actions and support to help them flourish.”

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown

“Generation Z has been hit particularly hard by the economic fall out of the pandemic as the retail and hospitality sectors, which have taken such a battering, are often relied on to help school and university leavers find an entry-level job, and get started in the world of work.

“Sadly, this may not just be a bump in the road but could have long term consequences for the path of their careers.

“In reality, the underlying picture of unemployment is likely to be even bleaker as it’s clear that the government’s furlough scheme has been masking the devastation wreaked by the pandemic on jobs and the wider economy.

“There is no surprise that calls for its extension are coming thick and fast, but the government reckons its £2bn kic start scheme, offering subsidised jobs to 16-24 years olds will instead boost the prospects for this age group.

“But there is a risk that companies could be subsidised for hiring candidates for jobs they were always planning to create – without being significant enough to make up for the mass redundancies likely when the furlough scheme expires at the end of October.

“Consumer confidence is vital for any recovery and for a brighter outlook for the jobs market, but with fresh restrictions placed on gatherings and quarantine rules brought in for more countries, people will become even more fearful of spending, preferring to hunker down and wait out the winter.’’

Richard Baker, strategy and policy director at North East Local Enterprise Partnership (North East LEP)

“From the range of labour market data released today, combined with last week’s GDP data, we can see that the economy remains very fragile and that ongoing intervention continues to support employment and promote stimulus.

“Whilst the official level of unemployment in the North East region in May to July remains unchanged compared to the previous quarter, the ONS out-work benefit claimant count shows that the number of claimants in the North East LEP area increased by over 36,000 between mid-March and mid-August - about 7.3 per cent of the working age population.

“From UK data about hours worked and last week’s GDP data we can see that there has been some slow growth through July, however, GDP in July remains 11.7 per cent lower than in February.

“Looking forward, national data suggests that about 16 per cent of employees were still furloughed in August.

“We expect next month’s data will give us a clearer indication of how the economy is performing after the summer stimulus package and as the Job Retention Scheme winds down. However, it is clear this is going to be a stop-start recovery with the economy needing ongoing government and regional support.

“The North East Local Enterprise Partnership (LEP), CBI, North of Tyne and North East Combined Authorities have come together, with the support of industry, to form the North East COVID-19 Economic Response Group.

“We have supported the North East economy through the immediate impact of the response to COVID-19 and we are working to develop a comprehensive investment plan for the North East to ensure our region comes back stronger, greener and more inclusive than ever.”

Derek Cribb, CEO of IPSE (the Association of Independent Professionals and the Self-Employed)

“The labour market statistics this month reveal an alarming and avoidable drop in self-employment.

“In a recession, we would usually expect self-employment to be flourishing as companies seek out flexible expertise. Instead, we are now seeing a drastic and continuing decline in the sector.

“This is almost certainly because of the glaring gaps in government support: next to nothing was done for limited company directors and the newly self-employed and now we are seeing the consequences.

“The self-employed are vital for economic recovery, but huge swathes of the sector have been undermined and left behind. As a second wave of coronavirus approaches, government must do more.

“We urge the government to prepare a fair, flexible and focused extension of the Self-Employment Income Support Scheme – for the sake not only of the self-employed themselves, but also the economy.”

More to follow.

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