Major UK companies now have more than 75,000 job cuts in the pipeline, with more expected as partial lockdowns and social distancing continue into the summer months. Smaller companies are also being slammed, adding hundreds of thousands of job losses to the total.
UK government data so far hasn’t captured the hundreds of thousands of jobs that were likely cut in April.
The UK unemployment rate remained below 4% in March, according to official data. But more timely indicators that include April give a sense of the looming jobs crisis. The number of workers on company payrolls dropped by more than 450,000 between March and April, government data show.
The worst is almost certainly to come.
Some 8.7 million workers in the United Kingdom have been furloughed as part of a program under which the government covers 80% of their salaries. But with support being phased out from August until the program ends in October, and with businesses facing a collapse in demand, companies may struggle to find work for many furloughed employees when they return.
“Business leaders know that the government’s support can’t be infinite, but the ugly truth is that if there’s no money coming in the door, many firms will be forced to make difficult decisions come August,” Jonathan Geldart, director general of the Institute of Directors, said late last month.
Andrew Wishart, UK economist at Capital Economics, wrote last month that he expects the unemployment rate to increase to 9% in the coming months. “Most of that jump should quickly be reversed once the lockdown ends, but we still expect the unemployment rate to remain elevated over the next few years,” he said.