Coronavirus update: How high will unemployment rise in 2020?

At the end of 2019, a number of economists were starting to forecast that the UK economy was closing in on reaching full employment. But the pandemic has changed all that very quickly and Britain now faces an unemployment crisis.

The level of unemployment has climbed to higher levels because of the pandemic. In May 2020, 2.8 million people claimed unemployment related benefits. Between March and May 2020, there has been an increase of 1.6 million claimants.

The Labour Force Survey measure takes a number of months to pick up big turning points in the rate of unemployment, but this is expected to more than double from 4% in March 2020 to over 8% by the end of 2020.

The UK government has taken steps to mitigate the impact of the pandemic on jobs through their furlough scheme.

As of July 2020, more than 9 million employees have been furloughed through the Government’s Coronavirus Job Retention Scheme (CJRS) which comes to an end in October 2020.

The fear is that the gradual ending of the furlough scheme will lead to an intensification of the number of job losses announced by businesses as they look to control their costs.

Aviation, tourism and food retailing have been some of the sectors worst hit by a collapse in demand, revenues and profits. Some extra jobs have been created in supermarkets, online delivery providers and in the care sector.

Suggested reading:

FT (July 2020): Universities to cut thousands of academics on short contracts

FT (July 2020): Manufacturers warn of UK ‘jobs bloodbath’

FT (July 2020): Up to 240,000 UK fashion jobs at risk, warns industry body

Sky News (July 2020): Hermes delivers 10,500 jobs to meet stay-at-home shopping demand