What is the outlook for jobs in the UK?

As Airbus, easyJet, Upper Crust and others announce redundancies, what do we know about how high unemployment could go? Ben Chapman reports

Retail, hospitality and the performing arts are among the sectors laying off staff (Getty)

In the space of less than 24 hours, Airbus announced 15,000 job cuts, easyJet said it planned to close three UK bases, and Ryanair boss Michael O’Leary – in typically combative fashion – told staff they had to take a pay cut or 3,500 of them would be out of work.

When you add to that sorry total a further 5,000 workers who face losing their jobs at Upper Crust, it has been a bad week for jobs, particularly those in the travel industry.

Problems are not limited to one sector. Shirt retailer T M Lewin said it will close all of its shops, making 600 of its 700 staff redundant.

But just how bad is the UK jobs market?

There is no denying the outlook for jobs is pretty dire, worse than at any time since at least the 1980s.

The most up-to-date figures from HMRC show that there were 612,000 fewer people on company payrolls in May than in March.

The claimant count, which includes people on out-of-work benefits and those claiming universal credit because their income is low, has more than doubled from 1.2 million in March to 2.8 million in May.

Some 9.3 million people have been furloughed and some will not get their jobs back as the Coronavirus Job Retention Scheme winds down from 1 August, meaning the true unemployment figure is higher than what the official data shows.

Median monthly earnings fell 4.3 per cent between February and May, erasing more than 18 months of gains, and job vacancies dropped 60 per cent between March and May.

The situation facing the retail sector, one of the UK’s biggest employers, looks set to worsen, with new figures from the industry’s trade body showing shops have been forced into heavy discounts. Prices for non-food goods tumbled 3.4 per in June, having fallen by 4.6 per cent in May.

The announcements from Airbus and others are further evidence that overall unemployment is set to rise further when new figures are published in a couple of weeks.

Unemployment is set to peak at 11 per cent later this year, according to the National Institute for Economic and Social Research (NIESR). The Office for Budget Responsibility forecasts it will hit 9 per cent.

But there are some very tentative signs of a recovery, of sorts.

The Office for National Statistics has started looking at what it calls experimental data. These numbers are not as rigorously compiled as official statistics but they do give a much more up-to-date picture of what’s going on in the economy.

One of these indicators is vacancy data collected by online jobs portal Adzuna. After a sharp fall in the number of roles posted, the number of new vacancies ticked up for three weeks in a row with a 5 per cent rise in the week ending 21 June.

Encouragingly, there were 112,000 new job adverts posted during the week, up by 64 per cent from the last week of May. The biggest increases in job adverts were for customer service jobs, parking attendants and speech therapists. Job adverts for chefs, waiters and waitresses, catering assistants and bar staff all fell significantly.

Despite the improvement in recent weeks, vacancies are still 59 per cent down on the same week last year, however.

Employers are also becoming more confident about the future, with more saying they plan to take on staff, according to a survey last week by the Recruitment and Employment Confederation, a trade body for recruiters.

A survey of manufacturers out today indicated that the sector may have stabilised after a sharp fall last month. The manufacturing purchasing managers’ index (PMI) came in at 50.1, with anything over 50 indicating the outlook has improved from last month. That still leaves activity well below its pre-pandemic level, however.

The Bank of England’s chief economist said this week said he thinks there are enough signs of a recovery to forecast a “V-shaped” recession.

112,000

New jobs posted on Adzuna, w/e 21 June

But he cautioned that, as the furlough scheme tapers off from August, some people may not get their jobs back.

The greatest risk, he said, was “a repeat of the high and long-duration unemployment rates of the 1980s, especially among young people”. All of which makes it imperative that the government introduces the right measures to support employment over the next few months.

Boris Johnson, this week, promised a “new deal” to build homes and infrastructure while helping the country out of recession, yet he only unveiled £5bn of spending, some of which had been announced before.

His plans compared unfavourably with Franklin D Roosevelt’s New Deal of the 1930s which got millions of people back to work and introduced a range of social programmes.

The government is also considering a VAT cut to help encourage spending. That would be welcome but a number of experts have called for a more targeted approach.

EasyJet is consulting on plans to shut three of its UK bases (Getty)

Unlike many previous recessions, this one has hit some sectors such as retail, aviation and hospitality very hard (as the latest job cuts show).

Milan Pandya, a partner at tax and advisory firm Blick Rothenberg, said non-food retailers need grants to support retraining of staff, tax relief to help them invest in online shopping and a temporary National Insurance holiday, which would reduce staff costs.

One proposal put forward by the Trades Union Congress (TUC) is for the government to guarantee jobs or training for people out of work for long periods, particularly young people.

Labour and the Liberal Democrats have both also called for some form of job guarantee. Unlike tax cuts, this has the benefit of targeting support directly at those who need it most.

What is clear is that more is needed than the government has announced so far.