Jobs and pay recovery grows as Covid fears fall
Unemployment is falling and pay is rising sharply in the latest signs that the economy is bouncing back from the pandemic as vaccination rates rise.
While the postponement of the ending of the last lockdown restrictions left some City economists warning that the recovery could yet be derailed, the overwhelming sentiment is optimism for a good summer.
Nearly 200,000 jobs were created in May, with the unemployment rate falling from 4.8% to 4.7%. That is the sixth month of jobs growth, leaving many to conclude that an economic corner has been turned.
At the start of Covid the most gloomy forecasts had unemployment going as high as 10%, a fate that Britain now seems well able to avoid.
While 3.4 million people are still furloughed, most seem likely to go back to their old job – or get a new one.
Jack Kennedy, UK economist at the job site Indeed, said: “Britain’s recovering economy has turned into an engine of job creation. May’s easing of lockdown restrictions on pubs and restaurants catapulted the hospitality sector from wiped out to white hot. The hospitality sector has suffered a greater number of job losses under the pandemic than any other, but in the three months to the start of June, hiring came back with a bang.”
Wages are rising at 5.6% a year, but that is partly a reflection of a cut in the number of low paid jobs.
Sandra Horsfield at Investec said: “The big unknown remains how firms’ staffing plans will evolve once the support from furlough schemes is gradually withdrawn through Q3. In addition, the delay to the final step in the government’s roadmap out of lockdown in response to the Delta variant will add to financial pressures for some firms, which may also have knock-on effects on their hiring. But there is no doubt that, for the time being, the labour market is on a much more solid footing than it has been through the pandemic so far.”
Rishi Sunak, the chancellor, is fending off calls to extend furlough. He said in response to today’s figures: “We understand the value of work and the distress caused by unemployment – that is why we are continuing to support people and jobs.”
Young people, especially those in London, remain worst affected by the pandemic jobs slump since so many of them work in hospitality.
Chris Goulden, at the Youth Futures Foundationâ¯said: “Since February 2020, the largest falls in employment were in the hospitality sector, among young people and in London. While these three groups have also seen the largest monthly increases, they remain well below pre-pandemic levels. The trend of long-term youth unemployment continues and this will have a scarring impact on young people and the economy. Around 250,000 young people have been out of work for over six months.”
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