'Worsening labour market' to come as workers on payroll fall by 600,000

The Office for National Statistics (ONS) has confirmed a fall of 600,000 people in work despite the unemployment rate remaining unchanged at 3.9% in the three months to March and the three months to April.

Speaking on Radio 4’s Today programme on Tuesday, Jonathan Athow, deputy national statistician for economic statistics at the ONS, said the labour market sometimes “lags what goes on in the economy” and “takes a little while to feed through”.

Athow said data received from HMRC indicated that the number of people in work had fallen by 600,000 compared with March, which suggested a “worsening and worsening labour market” to come. Based on the recent figures, he agreed that an estimated unemployment rate of 5% was possible for May, saying, “we haven’t quite seen the downturn feed through into unemployment yet.”

He commented that the “big change” had been “a dramatic drop” in the number of hours worked. which had fallen by a record 9%, suggesting that "furloughing seems to be where many employers are going and was taking the strain from businesses with employees on payroll. )”.

He added: “The slowdown in the economy is now visibly hitting the labour market, especially in terms of hours worked.”

With changes to the furlough scheme beginning in August and uncertainty over how business may reopen, operators in the hospitality industry are already making tough decisions with regard to staffing costs.