UK unemployment drops as businesses hire amid Covid easing

UK employers preparing for the easing of lockdown started hiring again in March, driving down unemployment for a third consecutive month, according to official figures.

The number of adults seeking work fell to 1.6 million in the three months to March, compared with 1.7 million in the three months to February, the Office for National Statistics said.

The quarterly rate was down to 4.8% from 4.9% in February, amid broader signs of recovery in the jobs market as progress with the Covid-19 vaccine programme helped give companies confidence to take on more staff.

According to the latest snapshot, the number of employees on company payrolls rose for the fifth consecutive month, but remained 772,000 below pre-pandemic levels, in a sign of the progress still to be made. The biggest falls in employment came in the hospitality sector among those under 25, and among those living in London.

Early indicators show the number of job vacancies continued to rise into April as non-essential shops and outdoor hospitality reopened in England and Wales, with most industries displaying growth, most notably in the accommodation and food service sectors.

However, the number of roles on offer remains below pre-pandemic levels, with arts, entertainment and recreation, and the hospitality sector worst affected.

The picture of strength emerging in the jobs market also comes with as many as 4.2m jobs furloughed at the end of March according to separate figures from HMRC, as the multibillion-pound emergency wage scheme prevents a higher rate of unemployment while the economy remains under pressure.

Suren Thiru, the head of economics at the British Chambers of Commerce, said: “UK unemployment remains on track to peak at a much lower level than in recent recessions. However, the squeeze on business cashflow from any marked delay to the planned full reopening of the economy may trigger renewed job losses, particularly when furlough becomes less generous over the summer.”

Young people have been affected by the pandemic in particular, leading to falls in both employment and unemployment as young people stay away from the jobs market altogether, either by continuing in education or not looking for work amid the impact of the crisis on job opportunities.

The chancellor, Rishi Sunak, said the government was aiming to help young people through its Kickstart job scheme, while the extension of furlough and self-employed support schemes beyond the end of its roadmap for easing restrictions in England would protect people’s jobs while the economy reopens.

“Protecting and creating jobs continues to be my top priority. While sadly not every job can be saved, nearly 2 million fewer people are now expected to be out of work than initially expected – showing our plan for jobs is working,” he said.