This morning's unemployment data from the Office for National Statistics is a real curate's egg. Taken at face value there is no issue of concern:
Unemployment has apparently hardly changed; employment rates are still exceptionally high, and economic inactivity is apparently low. This is nonsense, of course: almost all the true data is hidden by the furlough scheme, which the ONS admits. In that case, what is the true figure for unemployment now?
This is very hard to tell. What is clear is that the number of people on payrolls has fallen by 730,000 since March. This is despite furlough. Given that this is real-time data this is a very good indication of the increase in unemployment over that period. It pushes the likely current figure, excluding disguised unemployment to at least 2 million.
But it's worse than that. For example, there has also been a record decrease in the number of self-employed people over this period:
The actual decline in numbers was 238,000. These people should, then, be added to the unemployment total, pushing it above 2.2 million.
To compound matters, there are also record numbers of people leaving the employment market. As the ONS notes:
Looking more closely at the decreases in employment over the quarter by age, those aged 16 to 24 years decreased by 100,000 to 3.72 million, while those aged 65 years and over decreased by a record 161,000 to 1.26 million.
Those 161,000 are unemployed and not out of the employment market: we can be sure they'd be working if they could be. However, I will not adjust for them as they might already be in existing data.
Those on furlough remain high in number:
The implication is that well over 5 million people were still furloughed in June. No one can yet know how many of them are going to be unemployed.
And of those at work more are on zero-hours contracts:
So what is happening in the totals?
The obvious answer is that the rea;l total for unemployment now comfortably exceeds 2.2 million, but by how much we cannot be sure.
What worries me is that in that case talk of the total likely to be not much more than 3 million represents a failure to plan for what is clearly coming our way. And that's recklessly irresponsible.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
6-8 million is what I projected at the outset, I remain confident that is where it will end up. Only today Debenhams took another stride towards oblivion, and there are plenty of others waiting to follow.
Thanks for the analysis Richard. I’m so glad that you didn’t do a comparison with the 80s unemployment figures which seems to be the reference point in most news media.
With zero hours contracts, measurement differences and a completely different benefit approach, I don’t think it is possible to compare. Having been in that system a few times over my 45 years employment, I managed in the early 2000s to get support but I’m not sure the same would be true now (from anecdotal evidence anyway).
Unfortunately the only thing this government seems capable of is being irresponsible. Like you I fear for the future.
To avoid a car crash, the furlough scheme simply must be extended to at least 12 months, like the German “Kurzarbeit” law on which it was based. As I understand it, the Germans have even extended Kurzarbeit to 21 months, with a contribution towards the employer’s social security cost.
That makes complete sense – and is probably the cheapest option
The problem with furlough is that it is creating some serious dislocations. We basically have a 2 tier system of unemployment benefit, those on furlough, who are being protected from the brutal realities of Universal Credit, and those who are unemployed, and not similarly advantaged. The longer furlough continues, the longer this government can pretend that there is no crisis to be faced.
Oh, for sure, furlough is not perfect, and Universal Credit should be a safety net not a punishment, but extending furlough would be better than the alternative of abandoning 5 million people.
I agree
If they end the furlough scheme too early, they will be sitting on a powder keg very soon afterwards.
Mind you, the Tories will know how to manipulate it.
[…] one can be pleased we are in a recession. Few seem to have much comprehension as yet to the scale of the challenge this is going to face us with. But there is one thing about which we can have no doubt, and that is […]