Construction workers in London: The situation is likely to get worse
Photo: Hannah Mckay / REUTERSAt first glance, the British labor market seems to have defied the deep Corona recession. In the period from April to June the unemployment rate in the United Kingdom remained unchanged - and at 3.9 percent at a low level. Another key figure, which the British statistical office also announced this Tuesday, reflects the events of the past weeks better: In the second quarter, the number of employees fell by 220,000.
Not that many jobs have been lost in the UK since the 2009 financial crisis. More self-employed gave up than ever before, while the number of employees increased, said the statistics office.
The fact that the unemployment rate nevertheless remained unchanged can be explained by the criteria of the statistics: Many British people gave up looking for a job due to a lack of prospects of success in the corona crisis and were therefore not registered as unemployed. In addition, around 300,000 people reported that they were employed even though they did not work and received no wages.
The tax data for July also suggest that the situation on the UK labor market is more difficult than the official statistics suggest. Accordingly, the number of employees on company payrolls has fallen by 730,000 since March.
The central bank expects the unemployment rate to double
The job cuts could soon accelerate. Because the British version of short-time work benefits - the Job Retention Scheme - is now running out step by step by the end of October. If the state took over the employer's social security contributions in addition to 80 percent of the salaries at the beginning, the latter have to be paid by the companies themselves since August, and an increasing part of the salaries in the following two months. By November at the latest, when there is no more government support to keep a job, unemployment could skyrocket.
The central bank assumes that the unemployment rate could roughly double to 7.5 percent by the end of the year. "It was always clear to me that we could not protect every job," said Finance Minister Rihsi Sunak. The government's aid programs would work. This ensures "that no one is left without hope".
Great Britain is in a severe recession due to the corona pandemic: The Bank of England predicts that gross domestic product will shrink by 9.5 percent this year - an economic downturn the likes of which Great Britain has not experienced for around a hundred years. Next year, growth of nine percent should follow.
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