A couple of weeks back, we started to look at how the shutdown of large parts of the economy is beginning to impact the labour market. The figures made for grim reading, with more than 100 Local Authorities across the country seeing claimant counts more than double in the year up to April, and even the smallest rise being 35.7%. But with the claimant counts for May having been released, as well as the initial figures for the Coronavirus Job Retention Scheme (furlough), it’s time to take another look to see what how things have moved on.
As before, we need to caveat this by stating that claimant counts do not represent total unemployment, but are the number of people claiming benefits principally for the reason of being unemployed. Nevertheless, it is currently the best measure of unemployment we’ve got, and has historically proved to be a good indicator of unemployment.
The first thing to say is that the rise in claimant counts is utterly unprecedented. Although not yet at the peak of 3.09 million seen in July 1986, the huge increase of 1.56 million claimants in April and May has taken the total to 2.80 million, and the massive upwards trend suggests that the previous high will almost certainly be surpassed in the next month’s figures:
The next thing to note, is that whereas April’s figures showed 113 of the 391 local authorities across the country registering an increase in claimant counts of more than 100% since the start of the year, May’s figures show that this has increased to 308 areas. claimant counts have therefore more than doubled in almost four-fifths of local authorities since January, and in fact there is just just one area which has experienced an increase of under 50% since the start of the year (Inverclyde with 45.68%). The map below shows how widespread and how extreme this is, especially in the South of England, large swathes of which have seen an increase of more than 130%:
In fact, over 50 local authorities have now seen a tripling of claimant counts in their area, and the following chart shows the areas which have seen the biggest percentage rise. As with last month’s figures, it is clear that many tourist areas, such as South Lakeland and East Dorset, are suffering from the shutdown, but there are also noticeably more areas in the South East than before, such as East Hampshire and Hart in Hampshire, and Surrey Heath and Waverley in Surrey:
Of course, the reason why many areas have seen such high proportionate growth, is because they had relatively low unemployment prior to March, but if we look at the figures using absolute numbers, it still makes for fairly grim viewing. Whereas when we looked at this metric using April’s figures, there were 64 local authorities that had seen a rise of more than 4,000 in their claimant counts since the start of the year, this has now risen to more than 100 areas (107 in total):
As with last month’s figures, Birmingham once again tops the list in of absolute change by a considerable margin, but it is also noticeable that there are many more London boroughs on the chart than there were back in April (11 compared to 6), and in fact claimant counts for Greater London as a whole have risen by more than a quarter of a million (279,330) from January to May:
One final aspect to consider is the Government figures for May relating to people on furlough. As we’ve heard from news headlines, the numbers are huge with almost 9 million people across the country on the scheme. The map below shows furloughed workers as a proportion of people in each local authority that are economically active. As you can see, there are very few areas with less than a fifth of their workers (just 47 out of 391 local authorities) on the scheme, and there remains great uncertainty over just how many will return to work, and how many will have only seen job loss delayed:
Looking at the local authorities with the highest numbers of workers on furlough, we can see that just as with the claimant count data, Birmingham comes out on top, which is perhaps unsurprising as it has the largest number of economically active people of any local authority in the country. In fact, all 20 areas listed are within the top 25 areas in the country for numbers of economically active people:
If we look at the numbers as a proportion of economically active people in an area, we can see that there are many locations where more than a quarter of the entire workforce have been on furlough — one in four people effectively paid not to work — and in some places such as Crawley, South Lakeland and Hounslow, the figure is closer to one-third:
The figures presented above represent a huge and growing challenge, and we will of course continue to monitor the numbers as they are released each month. The scale of that challenge will need to be met with solutions in every locality in the country, and we are excited to announce that we are hoping to shortly launch a Covid Regional Response Report, which will combine local Jobseekers’ Allowance data with our Job Postings Analytics, in order to help users compare unemployment with changing employer demand in their area — something which should prove vital to helping people get upskilled and back into work.
We’ll be giving more details of this new tool soon, but do get in touch if you’d like more details now.