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UK economy begins to emerge from Covid but old problems remain

After a bruising couple of weeks, the government was in need of some good news and that was provided by the latest jobless figures. Fears that the end of the furlough scheme would lead to rising unemployment have proved groundless.

It is, of course, early days. There are still only flash estimates of what happened in October once the Treasury’s wage subsidies had come to an end but the signs are promising.

But rather than the expected surge in redundancies as firms had to cope without government financial support, there was a 160,000 rise in the number of payrolled employees. In the three months from August to October the number of job vacancies hit a new record of close to 1.2m – up almost 400,000 on the pre-pandemic level.

The Office for National Statistics said in the July to September period – the months leading up to the scrapping of the furlough – the number of people moving from job to job was higher than ever before, but this was the result of choice rather than people being forced to move because they had been dismissed.

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Rishi Sunak said the figures were tribute to the “extraordinary success” of the furlough and few would dispute that claim. The unemployment rate fell by 0.5 percentage points to 4.3% in the three months to September and is only marginally higher than it was when Covid-19 arrived in early 2020.

Some of the workers who came off furlough in October may have gone into part-time rather than full-time jobs, but even so the labour market has shown resilience throughout the pandemic.

Andrew Bailey, the governor of the Bank of England, said on Monday that he wanted to see what was happening to employment post-furlough before deciding whether to support higher interest rates. Nothing in the official data suggests the City is wrong in its belief that borrowing costs will rise from 0.1% to 0.25% next month.

Indeed, the economy as a whole is now starting to go post-Covid. The inflation figures due out on Wednesday will still show the impact of the virus on global energy prices and on supply chains but in other respects it is as if the past 18 months never happened.

There are two sides to that. The good news is that the labour market has emerged relatively unscathed. The bad news is that the problems of February 2020 – low investment, low productivity, weak underlying growth – are problems that remain to be tackled in November 2021.

By Larry Elliott

Source: The Guardian

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Covid: Planned redundancies at lowest level since 2015

Employers are planning the lowest number of job cuts for over six years, as the economy reopens after the pandemic.

Redundancy figures for June from the Insolvency Service saw 15,661 positions put at risk in Great Britain.

Last June saw nearly ten times that number, the worst on record.

The reduction in expected redundancies comes despite the imminent end of the furlough scheme which was designed to protect jobs during the pandemic.

Employers planning 20 or more redundancies have to file a form called HR1 notifying government at the start of the process.

This data gives an early indication of moves in the labour market, months before they show up in the official unemployment figures.

Proposed redundancies have been on a downward trend since September, despite two lockdowns being imposed across most of the UK during that period. June saw the lowest monthly total since February 2015.

Redundancy figures from the Office for National Statistics have shown a similar trend, a few months later.

“The data suggest that there is no spike in redundancies coming in July or August,” says Xiaowei Xu, senior research economist at the Institute for Fiscal Studies. “The labour market is in a much better position than anyone expected at the start of the pandemic, and it shows how well the furlough scheme has worked,”

The latest numbers are the lowest since the Insolvency Service tightened up reporting guidelines, according to Tony Wilson of the Institute for Employment Studies.

Before that, it was more common for firms to fail to file the necessary paperwork when planning redundancies, leading to artificially lower figures, he says.

The number of HR1 forms filed has also been falling this year, with 179 forms filed by 151 different employers.

That’s the lowest number of forms since 2014, despite the winding down of the furlough scheme, where the government has supported jobs in the pandemic by paying wages when employers cannot.

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No rise despite end of furlough
From July, employers will have to pay 10% of employees’ wages, on top of pension contributions and employer’s National Insurance. That rises to 20% in August, until the scheme finishes completely at the end of September.

“Anyone who has been on furlough this year has already cost their employers money – so their employers must be keen to keep them on. It’s not surprising that they are not being made redundant in large numbers,” says Ms Xu.

A total of 11.6 million jobs have been furloughed during the pandemic, though only 2.4 million were still on furlough at the end of May.

The success of the furlough scheme and the vaccine programme have lead many economists to cut their forecasts of how many jobs would be lost in the pandemic.

“By the time the furlough scheme ends on 30 September, the economy is likely to be strong enough to support a level of employment not far off where it is now. In fact, there is evidence that firms are finding it increasingly difficult to hire workers, especially in industries such as transport and manufacturing,” says Ruth Gregory, senior UK economist at Capital Economics.

“I think it’s likely that many firms have already made and communicated their plans and that with the easing of restrictions happening on schedule next week, we just won’t see any significant increase in redundancy notifications over the next few months,” says Mr Wilson.

Until recently, HR1 data were not routinely published, except for in Northern Ireland.

Last year the BBC began requesting these figures through the Freedom of Information Act, revealing the extraordinary increase in redundancy plans through the spring and summer of 2020.

This year, the Insolvency Service has started to publish these figures every month on its website.

The data only covers firms proposing 20 or more job cuts, so smaller firms are not picked up by these figures. Employers sometimes notify more redundancies than they eventually make.

The figures are not classified as Official Statistics, which are subject to rigorous quality control procedures.

Data for Northern Ireland is published by the Northern Ireland Statistics and Research Agency as part of its monthly Labour Market Report.

By Ben King

Source: BBC

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Redundancies Amongst the Over 50s Nearly Tripled in a Year

Redundancies amongst the over 50s have increased by 195% in a year, with the level and rate both higher than any other age group, according to new analysis of official ONS statistics from Rest Less, the digital community for the over 50s.

Rest Less’s analysis of the latest data produced by the Office of National Statistics shows that nationally, redundancies hit a pandemic peak of 395,000 in September to November 2020. Whilst redundancy levels have fallen nationally by 22% since the peak, they are falling more slowly amongst older workers.

Stuart Lewis, Founder of Rest Less, commented on the analysis: “While there are plenty of reasons to be optimistic about the economy starting to open up, it’s clear that businesses are far from out of the woods yet, with many still struggling to survive and the level of redundancies remaining historically high.

‘Whilst the extra extension to the furlough scheme has stemmed the flow of redundancies for now, redundancy rates amongst the over 50s remain stubbornly high and are the highest of all age groups.

‘With an estimated 1.3 million workers over the age of 50 still on furlough, there is a very real danger of a tsunami of redundancies amongst workers in their 50s and 60s when struggling employers are required to increase their contribution to the furlough scheme from July.

‘This is of concern to all of us, as previous research has shown that once unemployed, workers over the age of 50 are two and a half times more likely to drift into long term unemployment than their younger counterparts due to a mix of age discrimination in the recruitment process and a lack of accessibility to tailored retraining programmes.

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‘With the state pension now standing at 66 for both men and women, without more tailored Government support – similar to the scale and breadth of initiatives being put in place for younger workers – large-scale, long-term unemployment of this talented section of the population risks removing the engine room of growth for the entire UK economy.”

Kim Chaplain, Associate Director – Work, from the from the Centre for Ageing Better, commented: “These figures show just how devastating the impact of the pandemic has been on over-50s, with over 100,000 made redundant between November and January alone.

“This is particularly worrying because we know that over 50s, are likely to struggle more than any other group to get back into work – so we risk seeing many of these people leaving the workforce for good.

“In the months ahead, it’s vital that we build back a multigenerational workforce. Our economy needs both the direct contribution of experienced older workers and the support they provide to other, less experienced groups.

“We need to see targeted employment support to help over-50s back to work, and a strong message from government that not only is this group just as entitled to work as younger workers, they also provide a valuable contribution we cannot afford to lose.”

By Nigel Barlow

Source: About Manchester

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Almost 300,000 redundancies since Covid pandemic hit UK

The UK’s unemployment rate soared during 2020 as some of the country’s largest businesses were forced to lay off hundreds of thousands of staff, with some of the biggest casualties in the retail, hospitality and travel sectors.

This year the PA news agency tracked nearly 280,000 announced redundancies or jobs that were put at risk since March 23, when the first lockdown started.

It is a clear demonstration of the cost to people of the economic chaos caused by coronavirus.

Some of the cuts, including 5,500 at Cineworld, are likely to be temporary, but the PA figures also hide a large number of job losses, many among smaller companies.

The Office for National Statistics said this month that the number of employees on payrolls had fallen by 819,000, most of which were at the beginning of the pandemic.

According to PA’s analysis, June was the worst month, with nearly 75,000 redundancies or possible job losses announced. However, this included HSBC and BP, whose plans for 35,000 and 10,000 possible redundancies were global, and not just limited to UK jobs.

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The fewest number of job losses announced in a full month was in April, shortly after lockdown started on March 23.

Retail jobs were the hardest hit, according to PA’s analysis, with more than 85,000 potential redundancies. Hospitality and travel companies both announced more than 42,000 losses.

The Bank of England said in November that it expected unemployment to peak at 7.75% next year, far ahead of the current 4.9%.

The Government hoped its furlough plan would save jobs, and has paid £46billion to cover up to 80% of the salaries of 9.9 million people at some point.

But between August and October, as the scheme was being phased out, redundancies reached a record high, at 370,000 in that quarter alone.

The furlough scheme, which was meant to come to an end in the autumn, was extended until April as more restrictions hit the economy.

A Government spokeswoman said: “We have put in place one of the world’s most comprehensive economic responses, spending over £280bn to protect jobs, incomes, and business throughout the pandemic.

“Our Plan for Jobs continues to support people of all ages to get back on the jobs ladder, levelling up the nation as we build back better. We’re doubling the number of Work Coaches across our jobcentres ensuring those in need have access to bespoke support, creating hundreds of thousands of opportunities for young people through our Kickstart Scheme and our SWAPs (sector-based work academy programmes) are helping people retrain for new industries.”

By Daniel Smith

Source: Wales Online

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