UK jobless falls again

21 April, 2021 12:00 AM printer

LONDON: Britain’s unemployment rate unexpectedly fell for a second month in a row to 4.9 per cent in the December-to-February period, most of which the country spent under a tight Covid-19 lockdown, official figures showed on Tuesday.

Most economists polled by Reuters had forecast that the unemployment rate - which has been held down by the government’s huge jobs subsidies plan - would edge up to 5.1 per cent from 5 per cent in the three months to January, report agencies.

The ONS said the fall in the unemployment rate was linked to a rise in the share of people who were out of the jobs market altogether. The so-called inactivity rate rose by 0.2 percentage points in the three months to February.

There was another reminder of the precarious state of the labour market in figures from Britain’s tax office which showed the number of employees on company payrolls fell by 56,000 between February and March, the first decline in four months.

That pushed up the total number of jobs lost since the onset of the coronavirus pandemic to 813,000, the ONS said.

“The latest figures suggest that the jobs market has been broadly stable in recent months after the major shock of last spring,” ONS statistician Darren Morgan said.

“With the prospect of businesses reopening, there was a marked rise in job vacancies in March, especially in sectors such as hospitality.”

Britain’s economy shrank by almost 10 per cent in 2020 after it locked down later and for longer than most of its peers.

But it is in the process of lifting its third lockdown while other countries in Europe have recently tightened their restrictions.

Finance minister Rishi Sunak in March extended furlough support - which pays the wages of around one in five employees - until the end of September.

Without the scheme, Britain’s jobless rate would be far higher and it is likely to rise when it ends, something the Bank of England is watching closely as it considers when to start thinking about scaling back its huge economic stimulus plan.

In April last year, the Office for Budget Responsibility said unemployment could hit 10 per cent.

Mr Sunak is hoping that by the time his furlough scheme expires, the economy will be largely free of Covid-19 restrictions after the fast roll-out of coronavirus vaccinations.

Suren Thiru, head of economics at the British Chambers of Commerce, said long-term unemployment, particularly among young people, might mean progress towards pre-pandemic levels in the labour market lags behind the wider economic recovery.

“Further action will be needed to support the labour market when the furlough scheme ends, including supporting businesses to recruit and retain staff through a temporary cut in employer national insurance contributions,” he said.