Despite the conclusion of the government's furlough plan, the number of workers on UK firm payrolls increased dramatically last month, following a record surge in persons transitioning from unemployment to work ahead of its closure.
Many people criticised the UK government for eliminating the furlough scheme which many employees relied on. Despite the fact that a small number of jobs were lost, Rishi Sunak maintained that the project was a success.
Since 1 March 2020, the Coronavirus Job Retention Scheme has sustained the wages of more than 11.7 million individuals at a cost of more than £70 billion as the COVID-19 pandemic halted large parts of the economy.
According to the Office for National Statistics (ONS), firms recruited 160,000 new employees to their payrolls in October, bringing the total to 29.3 million in the first month since the multibillion-pound wage subsidy system concluded recently.
The unemployment rate declined more than predicted, from 4.5% in August to 4.3% in the three months to the end of September. However, it is still higher than the pre-pandemic level of 4%.
Has the unemployment rate decreased?
The Resolution Foundation, a think tank, noted that it only took an employer one and a half months on average to fill a position, matching a previous record-breaking duration before the pandemic.
According to current figures, a net rise of 304,000 persons shifted from unemployment to work in the three months leading up to the end of September, the largest increase since 2001.
From late 2013 until the outbreak of the coronavirus (COVID-19) pandemic in December 2019 to February 2020, the unemployment rate has been steadily declining. Since then, it has risen, but since the end of 2020, it has declined again.
ONS also reported that average weekly wages were 5.8% higher in July-September than in the same three months of 2020, the weakest yearly gain since April.
Earnings were 4.9% higher than a year ago, excluding bonuses, the weakest increase since the March quarter.
The underlying rate of wage increase, according to the ONS, was between 3.4% and 4.9% for pay excluding bonuses, taking into account workers returning to full pay following furloughs and how job losses during the coronavirus lockdowns disproportionately affected lower-paid workers.
There are many factors that have caused the unemployment rates to fall after the end of the furlough scheme.
According to a number of employment experts, they have stated that part-time work opportunities and young people going on zero-hours contracts are driving the increase in employment, while many furloughed employees will have returned to their positions with fewer hours.
Will the UK job market continue to recover post-covid?
Current figures published by ONS show a drastic improvement and it may seem that the UK job market will continue to recover. However, many have expressed their concern about wages even though recent statistics show that starter salaries have risen considerably. Furthermore, researchers have also predicted that pay increases would not keep up with rising inflation.
The Resolution Foundation's chief economist, Nye Cominetti, said,
“While unemployment is unlikely to be a problem this winter, pay may well be. The economy needs ‘goldilocks’ pay growth – fast enough to protect living standards, but not so fast as to generate excessive inflation.”
Some experts believe that average salary growth has also slowed down. The average annual rise in total pay packages, including bonuses, dipped to 5.8% in September from 7.2% a month earlier, according to official statistics.
Suren Thiru, the British Chambers of Commerce's Head of Economics, also stated that despite the success of furloughs, the projected impact on hiring intentions from next year's national insurance rise, as well as slower GDP, might cause labour market conditions to deteriorate in the future.
He further emphasised the need of assisting businesses that were badly impacted by the Coronavirus epidemic, as well as the need for increased assistance for enterprises seeking additional talents when they are unable to hire locally. In the long term, the UK employment market will revive as a result of this.
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