Coronavirus: UK’s Covid jobs crisis in charts
From across the political spectrum, left to right, unions and economists, think tanks and charities, the chancellor has been hearing warnings that the UK is about to experience job cuts at a pace not seen since the 1980s.
The message has been a simple one: reducing support while people are staying at home, and businesses are closed or operating well below capacity because of Covid-19, unemployment will rise.
Businesses welcomed the government’s changes to the Job Support Scheme which is expected to keep hundreds of thousands of people in work, however, significant numbers of redundancies are still expected in the next few months.
In a new lockdown, huge numbers of firms could find they have no revenues and so cannot afford the contributions to wages required under the JSS.
So what do we know so far about rising unemployment in the UK?
Up until now, unemployment has remained relatively low, largely thanks to measures like the Job Retention Scheme as well as tax cuts for hospitality firms and business rate relief.
However, there was a jump in redundancies in the last available figures which is partly due to firms who cut jobs in the belief there would be no wage subsidy after furlough ended. Then, as the deadline approached, Sunak announced the Job Support Scheme.
The steep upward trajectory is expected to continue over the coming months. The claimant count, which measures people on jobseekers’ allowance or universal credit "principally for the reason of being unemployed. It shot up early in the pandemic and has risen more slowly since.
Crucially the main unemployment figures do not account for the furlough scheme which keeps people officially in a job even if they aren’t working. A more accurate view comes from total weekly hours worked. This paints a sobering picture that is not likely to improve as restrictions tighten further.
We don’t know for sure what will happen after the furlough scheme ends but many business owners and industry groups have said that they will not be able to afford to keep staff on. Under the new Job Support Scheme employers whose businesses have not been ordered to close must pay workers for 20 per cent of their hours and make an additional 5 per cent contribution.
Forecasts of how many people will lose their jobs vary widely and much depends on how the pandemic develops. All indications point to a sharp rise in unemployment in the coming months.
Which begs the question, why has the chancellor reduced support? He said recently that Conservative governments “always balance the books”. In the current circumstances that is a risk, one that could turn out to be a huge blunder.
Clearly public borrowing has risen sharply since the pandemic began as the monthly figures show.
However, it’s more helpful to look at the longer-term picture. The national debt has been much higher for a large chunk of the country’s history and interest rates are low meaning the cost of payments on the debt are manageable. If the economy gets back to growing again, that interest can be paid off without raising taxes or cutting spending.
The more pertinent question is, what would be the cost of not spending enough to support jobs and businesses? Most economists agree it would be huge.
The Bank of England has also printed £310bn since March to help deal with the crisis. This money has been used to buy government debt. In effect, the Treasury owes the Bank of England money which it could choose never to pay back.
