Skip to content
Join us

A Closer Look at the Latest Unemployment Figures


At first glance, the ONS employment statistics released on Tuesday do not seem to correlate with the projections of doom and gloom which have been circulating over the past few months of the Coronavirus crisis.

Nationally the unemployment rate sits at 3.9%, a rise of only 0.1% when compared with last year. In the North East unemployment fell by 14,000 over the quarter. However, when looking closer it becomes clear that it is, unfortunately, not the case that the economic downturn, predicted to be the deepest in modern history, has dissipated. Arguably the true labour market picture is being masked by both lags in Government data and the success of the Job Retention Scheme in protecting jobs at the height of the crisis. Headline figures aside, other indicators suggest that the UK may be on the brink of an unemployment crisis similar to that of the 1980s.

In normal times the ONS employment figures can tell us a great deal about the health of the labour market and indicate the health of the economy. However, the speed at which this crisis has unfurled has meant that the quarterly statistics released by the ONS have been unable to keep up. The headline unemployment/employment rates released yesterday only include data for the three months ending April 2020, and not the extended lockdown. Therefore, this seemingly positive news needs to be taken with a pinch of salt. In the months to come, ONS data that includes the months of May and June will likely offer a clearer picture of COVID’s impacts, not only on national but also regional employment.

Whilst the usual measures of unemployment have not yet caught up with the true effects of the economic crisis, other more up-to-date official data offer an insight. Between March and May, there was a 600,000 fall in the number of people on payroll in the UK. In other words, 600,000 people have lost their jobs in the past two months. Furthermore, between March and May, the number of vacancies available in the UK fell by a record 436,000, or 60%, far more than at any point during the 2008 financial crisis. In addition, the claimant count - that is the number of people claiming benefits, most often due to unemployment- has soared both nationally and in the North East. Between March and May, the North East’s claimant count rose to 10 per cent, an increase of 77 per cent when compared to last year.Some of this increase could be accounted for by adjustments to the Universal Credit system in response to COVID-19. However, the extremely large rise in the count is nonetheless deeply concerning.

Undoubtedly, the Government’s Job Retention scheme is likely to have postponed the worst of the crisis’ job losses. In the scheme, the Government pays 80 per cent of the wages of any worker who would otherwise have been made redundant. The scheme’s uptake has been phenomenally high, with one in four workers nationally having been placed on the scheme. In the North East, 282,500 workers have been furloughed, and their fate, like others in the country, remains uncertain.

What is unclear is how many will return to their jobs after the scheme ends, and whether the scheme will have mitigated mass unemployment, or merely delayed it. According to a YouGov poll, 51 per cent of businesses are intending to make redundancies within three months of the end of the Job Retention Scheme, whilst only 34 per cent were confident all their staff would be kept on. It seems likely that in the coming months we will see an uptick in the unemployment rate, both when the data catches up with the current situation and when the Government’s various income support streams are wound down.