40 1GM Wednesday October 14 2020 | the times
Business
The jobs market has shown signs of
recovery after the number of payrolled
workers rose for the first time since the
pandemic, job vacancies increased at a
record rate, total hours increased and
average pay growth stopped falling.
The Office for National Statistics
said that payrolls had risen by 20,000 in
September from August’s total, the first
increase since Covid-19 struck in
March. The total was still 673,000 fewer
than before the pandemic.
The small increase in payrolls came
Second wave could deepen
economic scars, says Bank
Gurpreet Narwan
Economics Correspondent
A resurgence in coronavirus cases is
likely to cause more long-term damage
to the economy, the governor of the
Bank of England has warned.
In a session before the House of
Lords’ economic affairs committee,
Andrew Bailey said that a second wave
would amplify structural changes in
the economy that could trigger busi-
ness failures and job losses.
“As Covid returns and if the prospect
is that it will go on for longer the
prospect of scarring would increase,” he
said. “It’s very hard at the moment to
put an estimate on how much scarring
there will be.”
In its most recent Monetary Policy
Report in August, the Bank warned that
a sharp drop in business investment
because of the pandemic would dam-
age the economy’s productive capacity
in the long term. The Bank also said
that persistently high unemployment
and a mismatch between workers’ skills
and the supply of vacancies would
affect the jobs market. The supply capa-
city of the economy was projected to be
about 1.5 per cent lower by the end of
2022, but policymakers have since said
that the damage could be greater.
Much of the output lost during the
full lockdown has been recovered, but
the economy is still between 9 per cent
and 10 per cent smaller than it was
before Covid-19. Mr Bailey described
this as “a massive shortfall by historic
standards”.
Economists expect the Bank to step
up its monetary stimulus. As well as
potentially increasing its asset purchas-
ing programme, it is considering whe-
ther negative interest rates could be
used for the first time in Britain.
Rates were cut to 0.1 per cent in
March. Mr Bailey said that the Bank
was still reviewing the option of nega-
tive interest rates, and added: “Only
when we get through these questions
will we be in a position to say if it is a tool
we would use in any given position...
We are not there at the moment.”
Job vacancies ease pressure after
despite changes to furlough that
required employers to pay 10 per cent of
wages, compared with zero in August.
Some economists had expected the
higher contribution to lead to more
layoffs.
Payrolls have become the clearest
labour market indicator because offi-
cial figures have been muddied by the
furlough scheme.
Vacancy rates jumped sharply in the
three months to September as lock-
down restrictions eased and employers
began hiring. Advertised vacancies rose
from a historic low of 343,000 in the
April-to-June period to 488,000 in July
to September, the fastest increase on
record. However, they remained
332,000 lower than a year ago.
With people coming off furlough,
total weekly hours worked rose at a
record pace, climbing by 20 million
hours to 891 million in August. How-
ever, they remained well below the
1.05 billion figure recorded in February.
Britain has been holding a jobs
crisis at bay since March, when much
of the economy was closed to stop the
spread of the virus. Official figures have
failed to capture the impact because
furloughed workers remained em-
ployed and data collection has been
difficult.
However, official figures showed a
sharp increase in unemployment to
4.5 per cent for the June-to-August
period, from 4.1 per cent in the three
months to the end of May. A total of
1.52 million people were out of work,
209,000 more than a year earlier and
138,000 more than in the previous
quarter.
Redundancies soared to 227,000, the
highest level in more than a decade and
74,000 more than in the three months
to July as companies shed staff. The lay-
offs pointed to a sharp increase in
unemployment in the months to come.
Employment has now fallen by
482,000 since the three months to
February, but official joblessness has
risen by only 158,000 in that time. The
Bank of England expects the unem-
ployment rate to peak at 7.5 per cent,
which would mean one million more
people becoming unemployed.
The claimant count, measuring
support for the unemployed and those
on lower incomes, rose by 28,000 in
September to 2.7 million, taking the
total increase since March to 1.5 million.
Young men have been hit the hardest.
Of the 482,000 total fall in employ-
ment, 239,000 involved those aged
between 18 and 24. The jobless rate for
the age group has risen from 10.5 per
cent to 13.1 per cent, but among young
men it has jumped to 15.7 per cent,
meaning that more than one in six of
those aged between 18 and 24 are un-
employed. There also have been sharp
falls in the numbers of part-time and
self-employed workers.
Average wage growth, which had
been falling, stabilised in the three
months to August, rising to zero from
-1 per cent in the three months to July.
Regular pay, excluding bonuses, was up
by 0.8 per cent on last year, compared
with only 0.2 per cent in the previous
three-month period.
Rishi Sunak said: “I have been honest
with people from the start that we
would, unfortunately, not be able to
save every job. But these aren’t just
statistics, they are people’s lives. That’s
why trying to protect as many jobs as
possible and to help those who lose
their job back into employment is my
absolute priority.”
Philip Aldrick Economics Editor
Hard work
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0
2
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Unemployment rate
Aged 16 and over, seasonally adjusted
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Redundancies have jumped
UK redundancies, not seasonally adjusted
Job vacancies are increasing
Number of vacancies in the UK,
seasonally adjusted
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2012
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UK redundancies, not seasonally adjusted
Job vacancies are increasing
Number of vacancies in the UK,
seasonally adjusted
00
200
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1 ,000
000 s
Jul-
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2001
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