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650,000 fewer workers on UK payroll

Paloma Kubiak
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Paloma Kubiak

The number of paid workers in the UK fell by 650,000 in the three months to June, according to estimates from the Office for National Statistics.

Early indicators for June 2020 suggest the number of UK employees on payroll is down 2.2% (649,000) compared to March, though the largest falls were seen at the start of the pandemic and the decline is slowing, the ONS said.

Employment is weakening with data suggesting there were 32.95 million people aged 16+ in work between March and May which is 126,000 fewer than the previous quarter. The employment rate stands at 76.4%.

Self-employment has been hit hard with record decreases noted – down 178,000 on the quarter to 4.85 million.

But the ONS said unemployment is largely unchanged, with an estimated 1.35 million reported in the three months to May. This is 55,000 more than a year earlier, but 17,000 fewer than the previous quarter.

However, the ONS said there are signs of economic inactivity rising, with people out of work not currently looking for work.

Hours worked has fallen to a record low both on the year and on the quarter.

Its analysis also revealed there were around half a million people not in work due to the coronavirus pandemic who are receiving no pay.

Of those who are still being paid, the rate has declined 0.3% on the year, particularly hitting industries where furloughing is prominent such as in accommodation and food services. When taking inflation into account, the fall actually equates to 1.3%.

However, the claimant count fell slightly in June to reach 2.6 million which includes both those working with low income or hours and those who are not working.

Vacancy numbers in the three months to June are at their lowest level since the ONS started collating the data in 2001 – at 333,000. This is 23% lower than the previous record low recorded in 2009.

‘This is just the start’

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said the official statistics paint a relatively rosy picture of employment.

“It’s only because employment figures include people who aren’t actually working, and unemployment figures exclude people who are unemployed.

“Look more closely at unofficial measures, and a truer (much more miserable) picture emerges. We’ve seen 650,000 jobs lost, 178,000 self-employed people throwing in the towel, the claimant count more than doubling, and so few jobs being advertised that people have given up looking for work.

“And this is just the start. The OBR has predicted unemployment will hit three million this year, and as much as four million in 2021.

“It means that those who are lucky enough to still be in work need to plan for the worst. If you don’t have an emergency savings safety net, it’s important to put away anything you can afford, just in case your circumstances change,” she said.