United Kingdom: Labor market remains resilient through February
March 23, 2021
According to the ONS, in November–January the unemployment rate dipped to 5.0% from 5.1% in the previous rolling quarter. Experimental data for February showed that employment picked up slightly from January, although job vacancies stalled in the three months to February. Taken together, the data highlights that the labor market remains in solid shape notwithstanding the third national lockdown, aided by the government’s wage subsidy scheme (furlough).
In March, the chancellor announced the extension of the furlough scheme until end-September, although employers will be asked to contribute more towards the scheme from July. This should delay the rise in unemployment this year and also limit the extent of the rise, as by September demand should be stronger and the economy better able to absorb the reduction in government support.
According to James Smith, economist at ING:
“The unemployment rate will tick higher later this year as the furlough support is removed. How much depends on how many so-called viable jobs can be saved, and in principle, the fact that the scheme has been extended for a few months beyond the April/May reopening dates should give cash-strapped hospitality/service-sector firms time to get back on their feet. […] There will inevitably though be some jobs that are no longer viable, either because the firms are fighting for survival or because business models have changed.”