Bumpy ride ahead for jobs market, report predicts

The UK is set for an increase in unemployment even though recruitment will remain strong as the furlough scheme comes to an end, research suggests.

The Resolution Foundation predicted that the jobs market will have a “bumpy ride” when the UK Government scheme winds up at the end of the month.

The think tank says the programme has been an “overwhelming success”, protecting over 11 million jobs since March 2020, while an expected Covid-driven unemployment surge hasn’t materialised.

But the foundation added that with around 1.7 million workers still on furlough in late July, and with the rate at which people are coming off furlough stalling, the labour market remains “far from full health”.

Its report showed that if furlough rates continue to fall at the same pace as they did between April and June, when the economy was reopening, around 900,000 employees would be still be on the scheme when it closes.

Many of these employees will to return to their previous jobs, but the think tank said firms are unlikely to have the capacity to immediately take on all previously furloughed staff.

Unemployment could increase by around 150,000 in the autumn, it was predicted.

Hannah Slaughter of the Resolution Foundation said: “The furlough scheme has protected 11 million jobs and prevented an unemployment catastrophe. But with the scheme ending in less than four weeks’ time, there is huge uncertainty about what will happen next to the jobs market.

“As many as 900,000 workers could still be on the scheme when it closes, though the majority are likely to return to their previous jobs.

“With firms already reporting ‘hiring bottlenecks’, even a fresh surge in job starts in unlikely to be enough to prevent unemployment rising this autumn.”

Gary Smith, GMB general secretary, said: “The Covid crisis has laid bare the terrible inequalities in the UK economy after a decade of cuts.

“A furlough cliff-edge will make a bad situation worse – increasing pay inequality and unemployment – and making a farce of the Government’s ‘levelling-up’ agenda.

“It will suffocate any economic recovery before it even gets going. Getting the UK back on its feet is a process – not an event.

“GMB is campaigning for proper sectorial support as the furlough scheme tapers off, value for our key workers, stronger and better rights at work and a proper industrial plan for jobs and investment in our forgotten communities.”