UK unemployment rose in July despite lockdown lifting, with more job losses likely

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LONDON — Unemployment in the U.K. has risen in the three months to July, the latest official data published Tuesday showed, despite this period marking the beginning of looser restrictions. 

The headline unemployment rate for May to July stood at 4.1%, up from the 3.9% figure seen in the previous three month period, which covered the start of the U.K.’s lockdown that began in late March, the U.K.’s Office for National Statistics (ONS) said.

Estimates indicated that 32.98 million people aged 16 years and over were in employment between May and July, 202,000 more than a year earlier, but down 12,000 from the previous quarter. The annual increase was mainly driven by more women in employment, the ONS noted.

Quarterly figures show a different picture for men and women, however: the number of men employed increased by 22,000, while the number of women employed decreased by 34,000.

Shedding more light on the employment picture in the U.K., the ONS said that “the small quarterly decrease in employment was the result of large decreases in employment for young and older workers (people aged 16 to 24 years and those aged 65 years and over), the self-employed and part-time workers being almost completely offset by increases in employment for workers aged 25 to 64 years and full-time employees.”

The data comes after figures released last month revealed that, from March to May, employment in the U.K. had seen its largest quarterly fall in over a decade. That data covered the height of lockdown which began on March 23 and left only essential shops open. Some restrictions were eased in May and then, in mid-June, non-essential shops were allowed to reopen. In early July, cinemas, restaurants and bars could open their doors, allowing more employees in the U.K.’s hospitality sector to return to work.

However, Tuesday’s data is unlikely to show the true extent of job losses caused by the coronavirus due to the U.K. government’s “furlough” scheme, which has seen it subsidize the wages of workers in a bid to stop employers making job cuts. Under the scheme, the government has paid up to 80% of workers’ monthly wages up to £2,500 ($3,272), but the scheme is due to end October 31. Since August, businesses have to pay towards the wages of their furloughed staff too.

Commenting on the latest data, the U.K.’s Finance Minister Rishi Sunak said in a statement: “This is a difficult time for many as the pandemic continues to have a profound impact on people’s jobs and livelihoods. That’s why protecting jobs and helping people back into work continues to be my number one priority.”

Meanwhile, Capital Economics’ Chief U.K. Economist Paul Dales said it was encouraging that the first step in unwinding the furlough scheme had not led to a surge in job losses, “but we think it is only a matter of time before that happens,.”

“We still think that employment will fall more sharply and unemployment will increase more quickly as the furlough scheme continues to unwind and ceases at the end of October,” he said in a note.

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