As unemployment rises, men and low income workers suffer the most
Unemployment hit 4.9% in the third quarter – the three months to October – with the number of jobless now reaching 1.7 million people according to the Office of National Statistics most recent Labour Market Overview. Among those worst hit are men, and low-paid workers in hospitality and retail.
Male unemployment in the third quarter hit 5.3% – up 1.3% on last year and 0.8% on last quarter. By contrast female unemployment only hit 4.6% in the same period – and also saw smaller increases of 1% as compared with this time last year and 0.6% as compared with last quarter. Men still have a higher overall unemployment rate than women though due to higher labour market participation.
The pain has also been spread unevenly across different sectors.
Vacancies increased in the period September to November reaching 547,000 – up 110,00 on the previous quarter. However, this is still 215,000 fewer vacancies than this time last year – and vacancy rates differed sharply between different sectors.
Unsurprisingly the hotel, catering, and retail sectors saw the biggest falls in vacancies in the period October to November, according to a report by KPMG and the Recruitment and Employment Federation. Payroll data reflects this with the biggest decreases concentrated in these sectors. One can expect that the November lockdown delivered a further battering to these already beleaguered sectors.
However, a few sectors have, predictably, done well from the pandemic. Payroll data shows public administration and health and social work to be the only sectors to increase their total payrolls in the period February to November, by 27,000 and 74,000 respectively. There have also been large increases in vacancies in IT, computing, and engineering in October and November. This seems to reflect, among other things, the ongoing massive move to home working.
It seems that the pandemic’s economic pain has not only disproportionately affected men but workers in sectors which traditionally offer low wages. This hypothesis that the economy has been shedding low-paid workers on a large scale – while to a degree insulating higher paid workers – seems partially confirmed by the otherwise puzzling fact that average total pay grew by 2.7% in the third quarter of this year amidst a massive wave of redundancies.
Indeed, these grim unemployment numbers came off the back of a record 370,000 redundancies that took place in the same period – shattering the previous quarter’s record of 215,000 redundancies. There are now 819,000 fewer payroll employees in the UK than just before the pandemic began in February. Since October the rate of redundancies appears to have slowed. However, unemployment has continued to rise. Monthly labour force data shows unemployment hitting 5.2% in October, up 0.3% on the previous month.
What good news there is seems to be that things are still somewhat better than expected at 4.9% unemployment is actually lower than it had been estimated. Historically it is not bad either. In the 2000s pre-2008 crash UK unemployment hovered around 5% for years, and post-crash it peaked at 8.5% in November 2011.
There are, however, continued worries about the “cliff edge” when furlough is due to end in March. Many worry that sharp end to the furlough on that date will precipitate a spike in unemployment. Indeed, it seems no coincidence that redundancies spiked in the run up to July and November when the furlough schemes were originally supposed to end before Chancellor Rishi Sunak announced their extension.