UK jobs market booms despite end of furlough scheme – The Guardian

Unemployment rate drops to 4.3% as businesses recruit after removal of Covid restrictions
The number of workers on UK company payrolls rose sharply last month despite the end of the government’s furlough scheme, after a record increase in people moving from unemployment into work ahead of its closure.
The Office for National Statistics (ONS) said Britain’s employers added 160,000 more workers to their payrolls in October, taking the total to 29.3million in the first month after the removal of the multibillion-pound wage subsidy scheme.
The headline unemployment rate fell by more than expected, dropping to 4.3% in the three months to the end of September, from 4.5% in August. However, it still remains above the pre-pandemic level of 4%.
It comes after the Bank of England held back from raising interest rates earlier this month while waiting to see what happened in the jobs market after the removal of furlough, confounding financial market expectations for the first rise in borrowing costs since the pandemic began.
Some analysts said the jobs figures could provide Threadneedle Street with a green light for raising interest rates before Christmas – if a similar picture is maintained in the next set of official labour market figures on 14 December.
Andrew Bailey, the Bank’s governor, said on Monday he was “very uneasy” about rising inflation across the British economy, and came “very close” to raising rates earlier this month. The Bank will next make a decision on interest rates on 16 December.
“Today’s release has given the Bank an amber light and the next labour market release will probably give it the green light to raise interest rates from 0.1% to 0.25%,” said Paul Dales, the chief UK economist at the consultancy Capital Economics.
According to the latest snapshot, a net increase of 304,000 people moved from unemployment into work in the three months to the end of September, the biggest jump on modern records dating back to 2001.
Total job-to-job moves also rose to a record high, largely driven by people quitting their old jobs rather than dismissals; a development branded by some commentators as the “great resignation”, as people reassessed their priorities after lockdown and took advantage of the support furlough offered for job switching.
“It’s fortunate that the furlough scheme ended at a very strong period of labour demand,” said Grant Fitzner, the chief economist at the ONS. “We’re seeing unprecedented levels of job switching at the moment.”
It comes as employers across the country struggle with chronic staff shortages after the easing of pandemic restrictions, especially in care, warehousing and logistics, with job vacancies across the economy reaching a record high of almost 1.2m. The ONS said it was possible that those made redundant at the end of furlough would not yet be included in the data as they worked out their notice period. However, surveys of employers suggested the numbers made redundant was likely to be small.
More than 1m jobs were still furloughed in the final weeks of the scheme, although about half of workers had returned to their jobs on a part-time basis while still receiving wage support from the state.
Some employment experts warned the rise in employment was driven by part-time jobs and young people taking on zero-hours contracts, while many furloughed staff will have returned to their jobs on fewer hours.
In a sign of continuing pressure after the end of furlough, more than 2 million people were claiming unemployment-related benefits in October. Although down from a peak of almost 2.7 million at the height of the pandemic in 2020, it remains significantly higher than the 1.2 million claiming benefits before the pandemic struck.
It comes after the government removed a £20 uplift in universal credit from early October in the biggest overnight cut to benefits on record.
The chancellor, Rishi Sunak, said the latest figures showed the “extraordinary success of the furlough scheme” and were evidence of the government’s plan for jobs working.
“We know how vital keeping people in good jobs is, both for them and for our economy – which is why it’s fantastic to see the unemployment rate falling for nine months in a row and record numbers of people moving into employment,” he said.
However, experts said average wage growth appears to have lost momentum. Official figures showed average annual growth in total pay packets, including bonuses, fell to 5.8% in September from 7.2% a month earlier.
Although the drop reflected distortions caused by the pandemic gradually dropping out of the official figures, analysts said wage rises would fail to keep pace with higher levels of inflation.
Nye Cominetti, the senior economist at the Resolution Foundation, said: “While unemployment is unlikely to be a problem this winter, pay may well be. The economy needs ‘goldilocks’ pay growth – fast enough to protect living standards, but not so fast as to generate excessive inflation.”


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