Employment in Scotland down 15,000 during lockdown

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The number of people in work in Scotland fell by 15,000 between April and June as the impact of lockdown hit, according to the latest figures.

The proportion of people aged 16 to 64 in employment fell over the quarter to 74.3% (2.65 million), data from the Office for National Statistics (ONS) indicates.

The unemployment rate rose to 4.5% with 124,000 people out of work.

This was higher than the UK unemployment rate of 3.9%.

  • UK employment falls by biggest amount in a decade

The number of people aged over 16 in employment in Scotland fell by 15,000 over the quarter while the number of people classed as “out of work” rose by 11,000.

The UK economy has been battered by the coronavirus pandemic, but unemployment has not surged as much as feared because large numbers of firms have put employees on furlough.

‘One of the lucky ones’

Job seeker Kirsty Morgan, 23, was furloughed at the end of March.

She had been working as a sales administrator at a car dealership in Glasgow but was made redundant during lockdown.

She said: “I’ve been one of the lucky ones in a way to be made redundant so quickly.

“As the furlough scheme comes to an end, companies will start making decisions to let staff go.

“In that way I’ve been pretty lucky because I can start applying for things before the job market [changes].”

However, analysts warned that unemployment was set to worsen in the coming months as the scheme winds down, with some warning of a looming “cliff-edge” and a “lull before the storm”.

Jonathan Athow, deputy national statistician at the ONS, said: “The groups of people most affected are younger workers, 24 and under, or older workers and those in more routine or less skilled jobs.

“This is concerning, as it’s harder for these groups to find a new job or get into a job as easily as other workers.”

What’s the political reaction?

Scotland’s Business Minister, Jamie Hepburn said: “These statistics [for the period April to June 2020] cover a full three months of lockdown measures before some businesses started to re-open, but still do not reflect the full impact of the pandemic on the labour market as the Job Retention Scheme is continuing to help support many people remain in employment.”

Mr Hepburn called on the UK government to extend its furlough scheme – particularly for hard-hit sectors, including travel, tourism and hospitality.

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There have been calls to extend support to hard-hit sectors including hospitality

Chancellor Rishi Sunak said: “Today’s labour market stats make it clear that our unprecedented support measures, including the furlough and self-employed support schemes, are working to safeguard millions of jobs and livelihoods that could otherwise have been lost.”

He said the government could not protect every job, but it did have “a clear plan to protect, support and create jobs to ensure that nobody is left without hope”.

Unemployment up: employment down: with fewer job opportunities, fewer people making themselves available for work.

So, there are no surprises in the labour market figures for April, May and June – the most severe months of lockdown, with some easing in June.

However, it is a little surprising that the figures have not shifted more. An unemployment rate of 4.5% remains low, given the extraordinary economic events since March. The UK rate, of 3.9%, is the same as last year.

It seems the Labour Force Survey, which results in the normal headline employment statistics, is failing to capture those events, mainly because those on furlough are not counted as unemployed.

Partly, that is because many will return to work when it is there for them to do, and partly because the scheme is delaying unemployment for others.

The more significant measure of change is in UK-wide figures for the numbers on PAYE payroll tax, down by 730,000 between March and July.

That only covers employed people. Self-employed workers are harder to measure, and the income support scheme has not been as effective.

How does redundancy work?

Redunancy is a way for an employer to reduce their workforce.

Workers who have been continuously employed for two years can be offered a payment to compensate them for losing the job, or an alternative role within the same organisation.

Most workers are entitled to a notice period, and for redundancies of 20 or more people, the employer has to run a consultation with employees to discuss the best way forward.

There are rules to cover how redundancies are undertaken, to make sure that people being made redundant are selected fairly.

What happens after furlough?

The furlough scheme ends on 31 October. After this point, employers will have to decide if they can afford to retain all their existing staff.

If they cannot, they could consider extending the furlough period at the employer’s own expense, without government grants.

Companies sometimes ask staff to agree a temporary pay cut, or reduced hours, as a way to get through difficult trading periods.

However, it is likely that many companies will not be able to retain all their staff when they come back from furlough, and may have to consider making some staff redundant.

Can I get universal credit?

Universal credit is a payment from the government to help people who are on low, or no income.

It includes payments to help with childcare, caring responsibilities, or who can’t work because of sickness or disability.

To claim, you must be under state pension age, living in the UK, and have less than £16,000 in savings.

Some 16- and 17-year-olds can claim, though in most cases claimants have to be 18 or over.

IPSE, the independent workers association, says the average freelance worker went 5.5 weeks out of 13 without any work, and income fell by 25% between the first and the second quarters of the year.

There are clear indications that some have seen demand for their work fall away so far that they are back in the jobs market.

A measure of those claiming unemployment benefits shows a rise of 102% in the past year, to 222,300 in Scotland. Across the UK, the rise is 117%, to 2.7m.

There has been a significant shift, for the first time, in the number of those who were unemployed and then stopped looking for work.

And the number of weekly hours worked, across the UK, has fallen by nearly 20%, with the biggest fall in the category of accommodation and food services.

Those are the numbers that feel more like the reality facing people over the past few months of crisis, lockdown and stoppage for a large chunk of the economy.

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