The scale of Britain’s looming jobs crisis has raised doubts over whether Chancellor Rishi Sunak’s emergency measures will be enough as experts warn the latest unemployment figures are just the tip of the iceberg.
Economists are predicting mass unemployment when the Government’s furlough support scheme for workers ends in October, with vacancies also at record lows.
There was some glimmer of hope in the official figures, with the vacancy rate recovering marginally in June to 333,000 from 316,000 in May.
And while weekly hours worked fell a record 175.3 million between March and May to 877.1 million, it actually increased slightly through May.
But fears are the recovery will not be sustained, with the worst yet to come.
Nye Cominetti, senior economist at the Resolution Foundation think tank, said: “While the initial shock is levelling off, that doesn’t mean the jobs market is in recovery.
“The next big test of this crisis – on rising redundancies and unemployment – is still to come as the furlough scheme that has supported over nine million jobs is phased out.”
Samuel Tombs, at Pantheon Macroeconomics, added: “The unemployment rate will surge over the coming months as people re-engage with the labour market.
“Their chances of finding a new job look slim, given that job vacancies were down 59% year-over-year in June.
“What’s more, employment remains likely to fall during the autumn, when firms will have to start to contribute to the wages of workers that remain furloughed.”
Mr Sunak’s Plan for Jobs unveiled in last week’s summer statement was aimed at heading off soaring unemployment, including a Job Retention Bonus scheme to give £1,000 to firms for each furloughed employee they bring back to work.
He also announced a Kickstart Scheme and an apprenticeship recovery programme to help shore up the jobs market.
But there are fears this will not go far enough.
James Smith, ING developed markets economist, said: “The gradual unwinding of the job retention scheme over the summer is being seen as a potential catalyst for firms to begin making changes, and the jury is out on how far the new government bonus scheme incentivising firms to bring furloughed workers back will cushion the blow.”
The British Chambers of Commerce separately on Thursday urged the Chancellor to do more to protect jobs, calling for a temporary cut in National Insurance contributions.
Mr Cominetti added: “The Chancellor should deliver further support in the hardest-hit parts of the labour market to prevent the rise in unemployment being large and long-lasting.”