The number of people out of work and claiming work-related benefits in the UK jumped 23% to 2.8 million last month as the coronavirus crisis forced thousands of businesses to close.
Highlighting the impact of the pandemic on the workforce, the latest figures for May found that the number of jobcentre claimants increased from 1.24 million in March, representing a 126% increase since the beginning of the lockdown.
Data from the HMRC showed the impact of the pandemic on the number of people in employment in May following a fall of 2.1% or 612,000 on UK payrolls last month compared with March.
One group of analysts said the increase in claimants represented the most dramatic worsening of Britain’s labour market for more than 100 years, beating the early period of the 1930s depression.
The year-on-year increase in claimant unemployment was the highest ever recorded, the Institute for Employment Studies said, and went beyond the 1 million increase in claimants seen in the first year following the 1929 Wall Street crash.
Tony Wilson, the institute’s director, said: “If the public health crisis is just starting to ease, today’s figures show that the unemployment crisis is only just beginning.
“There can be no doubt now that we are on course for claimant unemployment of 3 million by next month, and it may well reach the highest ever recorded.”
Employment expert John Philpott, director of the Jobs Economist, described the data as like “watching the early part of a slow-motion video of a car crash when you already know the horrible outcome but have only witnessed the initial jolt”.
The figures will put pressure on Rishi Sunak to provide further measures to prevent a rise in unemployment over the summer months.
The shadow chancellor, Anneliese Dodds, said in parliament that Sunak needed to move more quickly and announce measures directed at the worst hit industries to prevent a wave of job losses.
She demanded a summer budget targeted at support for young people.
“Will the government set out the back-to-work budget we need, with a focus on jobs?” she said.
The Office for National Statistics said its May claimant figures were included in the unemployment data to give a more up-to-date indication of the impact on jobs across the country.
Figures based on a standard measure of unemployment covering the three months from February to April also showed records being broken, though not at the rate revealed by the claimant data.
The ONS said the most striking fall was in the total number of hours worked on average each week, which slumped by a record 8.9% in the three months to April 2020.
The coronavirus lockdown has prompted some of the UK’s most prominent companies to announce large-scale job losses. The aviation, automotive and retail sectors have been among the worst hit, as businesses adjust to dramatically reduced revenue projections.
While the government’s job retention scheme has so far protected millions of jobs, fears are mounting that unemployment will rise as the scheme begins to be phased out from August.
Since lockdown began on 23 March, some of the UK’s largest companies have announced plans to cut a total of 60,000 jobs globally, many of which will fall in the UK.
Rolls-Royce - 9,000 jobs
The jet-engine manufacturer has confirmed that 3,000 job cuts, of a planned 9,000 worldwide, will be made in the UK. In May Rolls-Royce said it would make the first round of redundancies through a voluntary programme, with about 1,500 posts being lost at its headquarters in Derby, as well as 700 redundancies in Inchinnan, near Glasgow, another 200 at its Barnoldswick site in Lancashire, and 175 in Solihull, Warwickshire.
BP- 10,000 jobs
The oil company said in June it plans to make 10,000 people redundant worldwide, including an estimated 2,000 in the UK, by the end of the year. The BP chief executive, Bernard Looney, said that the majority of people affected would be those in office-based jobs, including at the most senior levels. BP said it would reduce the number of group leaders by a third, and protect the “frontline” of the company, in its operations.
Centrica- 5,000 jobs
The owner of British Gas announced in June that it intends to cut 5,000 jobs, mostly senior roles, and remove three layers of management, in a bid to simplify the structure of its business. The energy firm has a total workforce of 27,000, of whom 20,000 are in the UK.
Bentley- 1,000 jobs
The luxury carmaker intends to shrink its workforce by almost a quarter, slashing 1,000 roles through a voluntary redundancy scheme. The majority of Bentley’s 4,200 workers are based in Crewe in Cheshire.
Aston Martin Lagonda – 500 jobs
The Warwickshire-based luxury car manufacturer has announced 500 redundancies.
British Airways - 12,000 jobs
The UK flag carrier is holding consultations to make up to 12,000 of its staff redundant, a reduction of one in four jobs at the airline. BA intends to cut roles among its cabin crew, pilots and ground staff, while significantly reducing its operations at Gatwick airport.
Virgin Atlantic - 3,000-plus jobs
Richard Branson’s airline is to cut more than 3,000 jobs, more than a third of its workforce, and will shut its operations at Gatwick.
EasyJet – 4,500 jobs
The airline has announced plans to cut 4,500 employees, or 30% of its workforce.
Ryanair – 3,000 jobs
The Irish airline intends to slash 3,000 roles and reduce staff pay by up to a fifth.
Aer Lingus – 900 jobs
The Irish airline, part of International Airlines Group (IAG) plans to cut 900 jobs.
P&O Ferries – 1,100 jobs
The shipping firm intends to cut more than a quarter of its workforce, a loss of 1,100 jobs. The company, which operates passenger ferries between Dover and Calais, and across the Irish Sea, as well as Hull to Rotterdam and Zeebrugge, will initially offer employees voluntary redundancy.
JCB – 950 jobs
Digger maker JCB said in May up to 950 jobs are at risk after demand for its machines halved due to the coronavirus shutdown.
Ovo Energy – 2,600 jobs
Britain’s second biggest energy supplier announced in May it planned to cut 2,600 jobs and close offices after the lockdown saw more of its customer service move online.
Johnson Matthey – 2,500 jobs
The chemicals company said in June it is planning to make 2,500 redundancies worldwide over the next three years. The move will affect 17% of the workforce at the firm, which is a major supplier of material for catalytic converters.
Bombardier – 600 jobs
The Canadian plane maker will cut 600 jobs in Northern Ireland, as part of 2,500 redundancies announced in June.
The Restaurant Group – 1,500 jobs
The owner of Tex-Mex dining chain Chiquito, and other brands including Wagamama and Frankie & Benny’s, said in March that most branches of Chiquito and all 11 of its Food & Fuel pubs would not reopen after the lockdown, leading to the loss of 1,500 jobs.
Monsoon Accessorize – 345 jobs
The fashion brands were bought out of administration by their founder, Peter Simon, in June, in a deal which saw 35 stores close permanently and led to the loss of 545 jobs.
Clarks – 900 jobs
Clarks plans to cut 900 office jobs worldwide as part of a wider turnaround strategy
Oasis and Warehouse – 1,800 jobs
The fashion brands were bought out of administration by restructuring firm Hilco in April, in a deal which led to the permanently closure of all of their stores and the loss of more than 1,800 jobs.
Debenhams – 4,000 jobs
At least 4,000 jobs will be lost at Debenhams as a result of restructuring, following its collapse into administration in April, for the second time in a year.
Mulberry – 470 jobs
The luxury fashion and accessories brand said in June it is to cut 25% of its global workforce and has started a consultation with the 470 staff at risk.
Jaguar Land Rover – 1,100 jobs
The car firm is to cut 1,100 contract workers at manufacturing plants the UK, potentially affecting factories at Halewood on Merseyside and Solihull and Castle Bromwich in the West Midlands.
Travis Perkins – 2,500 jobs
The builders’ merchant is cutting 2,500 jobs in the UK, accounting for almost a 10th of its 30,000-strong workforce. The company, which is behind DIY retailer Wickes and Toolstation, said the job losses will affect staff in areas including distribution, administrative roles and sales. The move will also affect staff across 165 stores that are now earmarked for closure.
Job vacancies also fell to their lowest level on record and inflation-adjusted pay declined for the first time in April since January 2018, the ONS said.
Real-term total pay including bonuses increased by just 0.7%, dragged down by a 1.7% fall in private sector pay. Public sector staff saw pay increase by 2.8%.
New government data also showed that 9.1 million workers have now been furloughed by 1.1 million employers, at a cost of £20.8bn to the Treasury.
Thousands of companies were forced to close down and mothball their businesses in March following the introduction of the lockdown, prompting the Treasury to agree to pay up to £2,500 a month towards the wages of workers who were sent home.
Changes to universal credit rules allow some workers to top up their wages with benefits, though anti-poverty campaigners argued that many people made redundant or suffering a big drop in hours are prevented from making a claim once their household income is taken into account.
Wilson said poorer areas were being hit hardest, with “coastal towns and ex-industrial areas seeing particularly big increases in unemployment”.
Tej Parikh, chief economist at the Institute of Directors, said employers were expected to begin making thousands more people redundant as the furlough scheme was phased out between August and October.
“As many as a quarter of firms have said they will struggle to pay anything toward furloughed workers’ pay come August. More bad news could be just round the corner, as redundancy consultation periods kick in.”
He added that the government must act now to “slash the cost of employment”.
