More than a third of UK employers plan to make staff redundant over the next three months, according to research warning of a cascade of job losses caused by the coronavirus pandemic.
Yet a sharp drop in vacancies signals trouble ahead. Vacancies fell 170,000 in three months to April, the biggest drop since the series began in 2001. Job openings had all but collapsed entirely by the time the lockdown was announced, according to research from the Institute for Fiscal Studies, with the decline coming across the wage distribution.
Benefit claims made by unemployed and underemployed people in the U.K. rose more last month than at any time on record, with the pain spread throughout the country. Jobseeker’s Allowance and related Universal Credit claims jumped by 856,500 in April alone. For context, the worst month during the 2008-09 financial crisis saw claims increase by 143,000.
The number of people claiming unemployment benefit in the UK soared to 2.1 million in April, the first full month of the coronavirus lockdown.
But the labour market is set to worsen, according to politicians and analysts, with Therese Coffey, Secretary of State for Work and Pensions, telling the BBC on Tuesday that the unemployment rate was likely “to increase significantly”.
Trouble is, there will be many people who are better off sitting at home on 80 percent of their salary than going out to work to earn 100 percent of it – once travel costs, childcare, tax and so on are taken into account. For millions, there is little incentive ever to return to work. Moreover, because the government has been so generous this time around it has created an expectation that it will always bail out businesses in trouble in this way. In future recessions we will have demands for furlough schemes. Individual industries, too, will start demanding to be able to furlough employees when the going is tough. We are heading towards an idea which even Jeremy Corbyn and John McDonnell rejected: a universal basic income.