Last reviewed 19 August 2020

According to the Office for National Statistics (ONS), the number of people in work decreased by 220,000 in the quarter April to June (Q2), the largest quarterly decrease since the financial crisis.

“Early indicators for July 2020 suggest that the number of employees in the UK on payrolls is down around 730,000 compared with March 2020,” the ONS said.

Its analysis shows that the youngest workers, oldest workers and those in manual or elementary occupations were those most likely to be temporarily away from paid work during the Covid-19 pandemic. There were also around 300,000 people away from work because of the pandemic and receiving no pay in June 2020.

Gerwyn Davies, Senior Labour Market Adviser at the Chartered Institute of Personnel and Development (CIPD), agrees that the figures demonstrate a dramatic deterioration for the employment prospects of young people, part-time workers and older workers.

The fact that reduced hiring, rather than increased firing of permanent staff, is the main cause of the jobs slowdown to date bodes ill for the coming months, he continued, if more employers turn to redundancies as a last resort.

Also reacting to the figures, REC (Recruitment and Employment Confederation) Chief Executive, Neil Carberry, said: “Despite a record fall in hours worked, unemployment remained stable to June — a sure sign that the Job Retention Scheme achieved its short-term aim. The challenge now is longer term.”

On a positive note, REC’s Jobs Recovery Tracker shows that, in mid-July, there were over one million active job postings — a number that has been rising steadily.

The challenge now, Mr Carberry said, is to help firms keep staff and boost hiring. He has suggested a targeted cut to National Insurance as a way of reducing the cost of employment without hitting pay packets.

The Resolution Foundation suggests that the latest data shows a mixed picture as the recovery enters a new phase. Hiring has restarted from a near stop earlier in the year, it notes, but, with average hours still down 20% in June, signs of improvement are few and far between.

The independent think tank believes that job openings have turned a corner, with vacancies up 40% (to 472,000) in July, although still down 41% (323,000) on February.

However, it concludes that, with employers contributing to furloughed pay from this month, many companies will inevitably be having tough conversations about how they staff their activities over the next few months.

Comment by Peninsula Associate Director of Advisory Kate Palmer

Disappointingly, many employers’ plans and forecasts for this year have had to take a backseat as the pandemic has taken centre stage, including many hiring opportunities that could have been.

Employers may see reducing recruitment as a way of also reducing redundancies, but they may have to start thinking about more long-term options to balance the two after the furlough scheme ends.