Coronavirus: Unemployment landslide could flatten a generation

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Sky’s Paul Kelso says the government faces an uphill task if it is to prevent young people especially being trapped in poverty.

Ever since the government ordered businesses to close and employees into their homes, state support has been the only thing holding the labour market up.

The job retention furlough scheme and similar support for the self-employed has kept more than 12 million people in their jobs even as the foundations of the economy crumbled under the weight of the COVID-19 pandemic.

The latest labour market figures from the Office for National Statistics (ONS) demonstrate how effective, and important, this £36.5bn bet has been.

                              Coronavirus: Unemployment landslide could flatten a generation

The headline unemployment figure of 3.9% is not in isolation disastrous as it covers the three months to May and also reflects the rude health of the labour market before the lockdown.

Look behind the facade, however, and the scaffolding is creaking under the strain.

State support did not prevent 649,000 people leaving company payrolls between March and June, nor the claimant count of those applying for Universal Credit more than doubling in three months to 2.6 million.

                              Coronavirus: Unemployment landslide could flatten a generation

                              Coronavirus: Unemployment landslide could flatten a generation

The global coronavirus infection numbers in real time

Vacancies offer another sign that the ground is shifting. There were 333,000 jobs available between April and June, 497,000 fewer than a year earlier and the lowest number since records began in 2001.

The combination of more people losing their jobs and fewer alternatives for them to move into only leads in only one direction.

A landslide is inevitable, not least because the underpinning support of the furlough scheme is about to be withdrawn.

                              Coronavirus: Unemployment landslide could flatten a generation

Furlough numbers appear to have peaked this week, with the number receiving wages from the government (9.4 million) and self-employed support (2.7 million) the same as the previous week.

In a fortnight, employers will be asked to start contributing to the cost of furlough, a shift that will begin to reveal just how many of these jobs still exist.

The Treasury is hoping employers will find ways to retain staff but their lack of faith is betrayed by their promise of a £1,000 sweetener for every job retained, even for those roles that are secure.

Many will find their job evaporates along with the state support however.

                              Coronavirus: Unemployment landslide could flatten a generation

Take hospitality. Restaurateurs have had a couple of weeks to establish the size of the market they are reopening into, long enough for many to know that they cannot justify pre-virus staffing.

City centre economies also find themselves decimated by the interruption to commuting and tourism and uncertain they will ever return to pre-crisis levels.

The Office for Budget Responsibility forecast this week that between 10% and 20% of those furloughed will join the dole queue, between 940,000 and 1.85 million people.

                              Coronavirus: Unemployment landslide could flatten a generation

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In even their best-case scenario the OBR says unemployment will double from pre-COVID levels, and in their central assumption it will reach 12% by Christmas, a rate last seen in the 1980s.

That would see unemployment pass 3 million – a figure with symbolic resonance for those old enough to remember that scarred decade – for the first time since 1987.

Joblessness is a unique scourge. It can trap individuals and families in poverty and dependence, condemn them to poor physical and mental health, a combination particularly ruinous to the young.

The aspiration and ambition of a generation could be crushed by the unemployment landslide rumbling towards us.

Responding to the crisis may prove the defining task of this government.


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