Unemployment rate: How many people are out of work?
Unemployment rate: How many people are out of work?
(about 1 month later)
Jobs are being cut around the UK because of the impact of coronavirus.
Companies are cutting hundreds of thousands of jobs as Covid-19 continues to hit the economy.
However, the unemployment rate has remained unchanged. So, what's going on?
The unemployment rate is rising even as people return to their workplace following the easing of restrictions. How high could the unemployment rate go?
How many people are unemployed?
How many people are unemployed?
The number of people claiming unemployment benefits surged to 2.7 million between March and July, according to official figures.
The most widely used measure is the unemployment rate. It counts how many people want a job and are able to work, but can't find one.
However, unemployment is difficult to measure and the picture now is complex.
The most recent unemployment rate - for May to July - is 4.1%, according to the Office for National Statistics (ONS).
One measure comes from the Labour Force Survey. This asks thousands of people every month if they are unemployed and looking for work.
That's a slight increase from the previous figure of 3.9%, but still close to the lowest it has ever been.
It is used to calculate the unemployment rate. At 3.9% it's close to the lowest it has been for 40 years - as if the current crisis never happened.
However, this number is always based on surveys taken in previous months and is not right up to date.
But in a lockdown, many people who want to look for new jobs are unable or unwilling to. They will be recorded as "inactive" and the number of people in this group rose by 301,000 in the three months to June.
Another more current measure of unemployment suggests that the real picture might be worse. The claimant count measures how many people are claiming benefits for being out of work, or on very low incomes.
Many more people told the survey they are employed but are on furlough. This is where people stop working but keep their jobs, and the government pays part of their wages.
Between March, when the lockdown began, and August, the number of people claiming these benefits rose 120% to 2.7 million.
The latest figures figures show 7.5m temporarily away from their jobs in June. Furlough comes to an end in October, raising fears that many more people will be out of work if under-pressure employers can't pay them.
Who is becoming unemployed?
And the Office for National Statistics (ONS) identified around half a million workers who say they have a job but are not working or being paid - freelance bar staff, for example, who expect to return to work when their pubs reopen.
The biggest rise in unemployment has been among young people - up 76,000 for 16- to 24-year-olds compared to last year.
How many job vacancies are there?
The ONS says that this is because young people are more likely to be employed in areas such as hotels, restaurants and tourism. Jobs like these have been particularly hard-hit by lockdown and quarantine restrictions reducing the number of tourists.
Other official data shows how coronavirus is beginning to affect the world of work.
Why is unemployment beginning to rise?
The number of employees on UK payrolls fell by 730,000 from March to July. Employment saw the largest falls in a decade, with younger workers, older workers and less skilled workers hit.
The government has been using measures to protect jobs. Under the furlough scheme, it has been paying most of the wages for workers when their employers cannot. That has prevented many of those people becoming unemployed.
Average earnings fell, and the average number of hours people worked dropped by a record amount to an average of 25.8 hours a week, according to figures for April to June.
But the furlough scheme is being wound down. Employers are being asked to pay a bigger proportion of the costs of their employees and the scheme will close at the end of October.
However there are some signs of things bouncing back. Hours worked in retailing, hospitality and construction rose. And there was a 10% rise in vacancies to 370,000 as small businesses took on staff to help meet coronavirus guidelines.
This is one reason why unemployment has begun to rise, as many businesses will decide they cannot afford to start paying those workers again and need to let them go.
However, vacancies are still at far lower level than they reached even at the depths of the last recession.
Recent figures showed 300,000 redundancies were planned in June and July alone, as employers prepared to cut staff.
This will have a big effect on future unemployment. Young people will struggle to get their first jobs, and workers who lose their jobs will struggle to find new ones.
How high could unemployment go?
How many people are claiming out-of-work benefits?
Most economists expect unemployment to continue rising for the rest of the year.
Over the past three months the number of people claiming out-of-work benefits more than doubled. It reached 2.7 million in July - more than doubling since the crisis began in March.
However, there are question marks over this number.
Benefit claimants are being moved to the new universal credit (UC) system.
Many groups which would not have been included before are listed as "searching for work" under UC and appear in claimant numbers. For instance, some are working, but only earning small amounts.
Also, many workers may have made a UC claim before receiving support payments from the government, including furlough.
According to research from the Resolution Foundation think tank, these groups account for more than a quarter of the rise in claimant numbers. Only 45% of the rise in benefit claimants between March and May was down to newly unemployed people, it calculates.
What will happen to unemployment in the future?
The furlough scheme ends in October - and employers will have to decide if they can afford to keep those workers. That could see a big wave of unemployment in the autumn.
Data from the Insolvency Service showed that employers were planning at least 139,000 redundancies in June. Other companies have since announced big job cuts - but those won't appear in official unemployment numbers for a couple of months at least.
Scenarios published by the government's spending watchdog, the Office for Budget Responsibility, give an official view of what might happen to unemployment.
Scenarios published by the government's spending watchdog, the Office for Budget Responsibility, give an official view of what might happen to unemployment.
In its optimistic scenario, the unemployment rate peaks at 9.7% this year, and returns to pre-crisis levels in 2022.
In its optimistic scenario, the unemployment rate peaks at 9.7% this year, and returns to pre-crisis levels in 2022.
In its "downside" scenario, it peaks at 13.2%, in 2021 - with four million people out of work. It is still at 6.3% by the end of this scenario in 2024 - well above pre-crisis levels.
In its least optimistic scenario, it peaks at 13.2%, in 2021 - with four million people out of work. It is still at 6.3% by the end of this scenario in 2024 - well above pre-crisis levels.
What questions do you have about unemployment, benefits, what happens next?
Are there signs of things getting better?
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From June onwards the government has allowed large parts of the economy to reopen, and this has contributed to an improvement in many areas.
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The average amount people earn had been falling sharply, but it began to stabilise between May and July.
The total number of hours people worked in July also increased slightly.
The number of job vacancies available in August was 55% higher than it was two months ago. However there are still fewer openings than before the crisis began.
