UK unemployment rose before coronavirus crisis, ONS figures show

Britain’s jobs market weakened in the three months to February before the coronavirus outbreak, despite a record number of people in employment.

Figures covering the months leading up to the Covid-19 outbreak showed the economy struggling to overcome Brexit uncertainty and the impact of cuts to welfare benefits that forced many older women and young people to take low-paid employment.

Unemployment increased from 3.9% to 4.0%, the number of job vacancies edged lower for the tenth consecutive month and wages continued to fall from a peak last June, the Office for National Statistics said.

Will there be a second wave of coronavirus?

Epidemics of infectious diseases behave in different ways but the 1918 influenza pandemic that killed more than 50 million people is regarded as a key example of a pandemic that occurred in multiple waves, with the latter more severe than the first. It has been replicated – albeit more mildly – in subsequent flu pandemics.

How and why multiple-wave outbreaks occur, and how subsequent waves of infection can be prevented, has become a staple of epidemiological modelling studies and pandemic preparation, which have looked at everything from social behaviour and health policy to vaccination and the buildup of community immunity, also known as herd immunity.

This is being watched very carefully. Without a vaccine, and with no widespread immunity to the new disease, one alarm is being sounded by the experience of Singapore, which has seen a sudden resurgence in infections despite being lauded for its early handling of the outbreak.

Although Singapore instituted a strong contact tracing system for its general population, the disease re-emerged in cramped dormitory accommodation used by thousands of foreign workers with inadequate hygiene facilities and shared canteens.

Singapore’s experience, although very specific, has demonstrated the ability of the disease to come back strongly in places where people are in close proximity and its ability to exploit any weakness in public health regimes set up to counter it.

Conventional wisdom among scientists suggests second waves of resistant infections occur after the capacity for treatment and isolation becomes exhausted. In this case the concern is that the social and political consensus supporting lockdowns is being overtaken by public frustration and the urgent need to reopen economies.

The threat declines when susceptibility of the population to the disease falls below a certain threshold or when widespread vaccination becomes available.

In general terms the ratio of susceptible and immune individuals in a population at the end of one wave determines the potential magnitude of a subsequent wave. The worry right now is that with a vaccine still months away, and the real rate of infection only being guessed at, populations worldwide remain highly vulnerable to both resurgence and subsequent waves.

Peter Beaumont

The figures come as more than 140,000 companies, employing a total of about 1 million workers, applied to the government’s job furlough scheme on its first day of operation on Monday.

The number of jobless workers is expected to soar in the coming months as companies react to the government’s lockdown by laying off staff, especially in the hardest-hit leisure, hospitality and retail industries.

The chancellor, Rishi Sunak, has acted to protect jobs with subsidies for employers, including the furlough scheme, officially opened on Monday, that will mean the government picking up the tab for 80% of the salaries of workers sent home up to a cap of £2,500 a month.

The extension of the lockdown last week is expected to trigger a further wave of redundancies, although the official figures, which are unable to capture current developments, will not reveal the full extent of the damage for several months.

The ONS said the estimated employment rate continued a long-term trend after it reached a record of 76.6%, which was 0.4 percentage points up on the year and 0.2 percentage points up on the quarter.

“Estimates for December 2019 to February 2020 show a record 33.07 million people aged 16 years and over in employment, 352,000 more than a year earlier,” the ONS said.

This annual increase was mainly driven by women in employment – up by 318,000 on the year to a record high of 15.7 million and workers aged above 50, who added 258,000 to the total to a record high of 10.7m million. The number of people aged 25 to 34 also reached a record high – up by 96,000 to reach 7.64 million.

Women above the age of 60 have entered the jobs market in droves over recent years following an acceleration of the government’s push to equalise pension rights between men and women, forcing many women to wait longer to claim their state pension.

The increase in self-employed workers – up by 195,000 to 5.03 million – outstripped the increase in the number of full-time employees, which increased by 184,000 to 20.87 million.

However annual wages, excluding bonuses, fell from 3% in the three months to January to 2.9% in February and in real terms slumped to 1.3%.

John Philpott, director of The Jobs Economist consultancy, said: “The UK labour market looks to have cooled before the Covid-19 lockdown measures placed the economy in a coma to help save lives.

“Although the number of people in work increased by a fairly healthy 172,000 in the three months to February this was not enough to prevent a rise of 58,000 in the number unemployed, lifting the unemployment rate back to 4%.

“Cooling was also evident in a fall in total hours worked, fewer job vacancies and softening in the rate of growth of average weekly earnings.

“Given what we know about the massive shock to the economy in the past month, it’s disconcerting to see that the jobs market was already starting to look a bit off colour when Covid-19 arrived on our shores.

“Whether this has implications for how well the jobs market recovers after the lockdown is unclear but in any case we won’t be seeing the unemployment rate anywhere close to 4% for several years, with a peak of at least 8% the best we can hope for even with the government’s welcome business support and job retention measures in place.”

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