The unemployment rate in the UK fell unexpectedly for the second month in a row, to 4.9% between December and February, most of which the country spent under a tight COVID-19 blockade, official figures showed on Tuesday.
Economists surveyed by Reuters had largely predicted that the unemployment rate – which was retained by the government’s huge job subsidy program – would reach 5.1%, from 5.0% in the three months to January.
The ONS has linked the fall to a large volume of men leaving the job market altogether. The so-called inactivity rate rose by 0.2 percentage points in the three months to February, repeating an increase during the first deadlock last year.
There was another reminder of the precarious state of the labor market, in figures from the British tax office, which showed that the number of employees on the company’s wages fell by 56,000 between February and March, the first decline in four months.
This has led to an increase in the total number of jobs lost since the onset of the coronavirus pandemic to 813,000 – more than half of which were held by people under the age of 25, and London, the most affected by hospitality, is the region. the most affected, the ONS said.
“If we do not act quickly, especially by focusing our support on the long-term unemployed, then we risk another lost generation,” said Tony Wilson, director of the Institute for Employment Studies.
About 363,000 people are classified as long-term unemployed after being absent for a year or more, but with a similar number in the range of six to 12 months, this figure could rise sharply.
The UK economy has shrunk by almost 10% in 2020, a decline greater than almost all of its European counterparts, after stalling later and more than many of them.
However, helped by the rapid launch of COVID-19 vaccines, it is in the process of lifting the third blockade, while other European countries have recently tightened their restrictions.
The ONS said there was a significant increase in job vacancies in March, especially in sectors such as hospitality, which reopened for outdoor business last week.
TAPER FURLOUGH
Finance Minister Rishi Sunak has extended his advance scheme in March – which pays the salaries of about one in five employees – until the end of September, although employers will have to start contributing to some of his July costs.
Without the scheme, the unemployment rate would be much higher – a year ago, British budget forecasters said it could reach 10%.
The Bank of England will monitor how many jobs are lost when they expire, considering how long they have to keep their huge economic stimulus program.
Suren Thiru, head of the British Chamber of Commerce economy, said long-term unemployment, especially among young people, could mean progress towards pre-pandemic levels in the labor market following the wider economic recovery.
“Further action will be needed to support the labor market at the end of the advance scheme, including supporting companies to recruit and retain staff through a temporary reduction in employers’ national insurance contributions,” he said.
The UK’s main wage-raising measure rose sharply again in the three months to February, up 4.5% year-on-year.
But the ONS said that the reading was distorted above by a decrease in the number of less paid and part-time jobs. After accounting for this, wage growth was much weaker at 2.5%, it is estimated.
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