UK employment remains weak as figures show record decline in total hours worked

Total number of weekly hours worked in Q2 2020 was 849.3m, down a record 203.3m on the previous year and down 191.3m hours on Q1 2020. The employment rate is 76.4%, 0.3% higher than last year, but 0.2% lower than Q1 2020. The unemployment rate is 3.9%, little changed on previous quarter and prior year period.

Workers furloughed under the Coronavirus Job Retention Scheme or who are self-employed but temporarily not in work have a reasonable expectation of returning to their jobs after a temporary period of absence. Therefore they are classified as employed as per the ILO definition and is the primary reason as to why the unemployment rate has not significantly increased.

The UK economic inactivity rate was estimated at 20.4%, 0.4% lower than the same quarter last year but 0.2% up on the previous quarter.

The economic inactivity rate is the proportion 16 to 64 year olds who aren’t in the labour force. People not in the labour force (also known as economically inactive) are not in employment but don’t meet the ILO definition of unemployment because they haven’t been seeking work in the last 4 weeks and/or are unable to start work in the next 2 weeks.

Young people under the age of 25, as well as old people over the age of 65, have been the hardest hit, in terms of employment levels, since the Covid-19 pandemic began. The graph below shows just how staggering the difference is between these age groups as compared to those aged 25 to 64, which have instead seen their employment levels increase over the period in question.

Those aged 16-24 saw employment declines over the quarter of 100,000 to 3.72m, while those aged 65+ saw record employment declines of 161,000 to 1.26m. Those employed aged 25-64 rose by 41,000 to 27.94m.

All part-time job gains between Q2 2015 and Q2 2020 have now all but reversed, although full time job gains continue to increase, as the graph below shows. Full-time employees were up 489,000 over the year and 144,000 on Q1 2020, while part-time workers decreased by a record 377,000 over year and declined a record 364,000 on Q1 2020.

Sectors seeing the greatest increases in employment over Q2 2020 were public admin, defence & social security, up 143,000 to 2.26m, financial and insurance services, up 107,000 to 1.27m, while professional scientific and technical activities were up 56,000.

On the other hand, sectors seeing the greatest declines were accommodation and food services, declining 137,000 to 1.48m, whole retail & repair of motor vehicles declined 60,000, while construction and manufacturing declined 57,000 and 49,000, respectively. The graph below shows the Q2 employment changes for the other sectors tracked by the ONS.

The numbers claiming state benefits in the UK rose 3.6% in July to 2.7m whilst representing an increase of 117% (1.4m) since March 2020. The level of claimant counts for July is the highest on record and bucks the decline observed in June 2020. The graph below shows how the level of claimant counts are almost double what they were during the financial crisis.