Number of people in work plunges 650,000 as Covid bites

The coronavirus' impact on jobs was laid bare today in official data showing there are now around 650,000 fewer people in paid employment than before the March lockdown.

The rate of unemployment remained largely unchanged in May at 3.9% but that was likely to leap as the state-funded furlough scheme comes to an end.

Office for National Statistics data showed the largest falls were seen at the start of the pandemic and while the number of people in paid employment is still falling, the decline is slowing.

Fewer jobs were lost than was expected in the three months to May as the furloughing scheme prevented companies from laying off staff. The number of people claiming benefits for unemployment fell 28,100 to 2.6 million.

In London the claimant count rate of unemployment remained at 7.5% - higher than any other region in the country at 460,000. The rate for men was 8.2% compared with 8.1% in May and for women was 6.8%, up from 6.7% before.

James Reed, chairman of the Reed employment group, said: "Even with the government's recently announced measures to support "jobs jobs jobs", the labour market is on a knife edge. The risk of mass unemployment remains high.

More than 9 million people are currently on government paid furlough which is being phased out between August and October.

Howard Archer, chief economic adviser to the EY Item Club said the data were not as bad as had been feared: "However, this should not mask the fact that unemployment poses a major threat to UK recovery prospects. It is clear the jobs market is currently under serious pressure."

Big companies from Boots and Rolls-Royce to Burger King and Pret a Manger have all announced they are slashing staff numbers recently.

Capital Economics economist Andrew Wishart said: "Overall, in the face of the sharpest downturn in recorded economic history, the damage to the labour market is remarkably limited. What's more, the timelier data for June suggested the first wave of job losses due to the coronavirus has petered out."

The Office for Budget Responsibility this week warned unemployment would hit a peak of 12% before Christmas under its main forecast - a worse level than in the 2008 financial crisis and close to levels last seen in 1984.