© Reuters. The City of London Financial District can be seen as people walk along the south side of the River Thames, amid the coronavirus (COVID-19) outbreak in London
By William Schomberg and Andy Bruce
LONDON (Reuters) – Britain’s unemployment rate unexpectedly fell for a second consecutive month to 4.9% between December and February, most of which was spent by the country under strict COVID lockdown -19, according to official figures on Tuesday.
Economists polled by Reuters had widely predicted that the unemployment rate – which has been kept down by the government’s massive job subsidy program – would drop from 5.1% to 5.1% in the three month to january.
The ONS linked the fall to a large number of men leaving the labor market altogether. The so-called inactivity rate rose 0.2 percentage points in the three months ending in February, echoing a rise in the first lockdown last year.
There was another reminder of the precarious state of the labor market in figures from the UK tax administration which showed the number of employees on company payrolls fell by 56,000 between February and March, the first drop in four months.
This pushed the total number of jobs lost since the start of the coronavirus pandemic to 813,000 – more than half of which were occupied by people under the age of 25, with London being the hardest-hit region, according to the ‘ONS.
“If we don’t act quickly, including focusing our support on the long-term unemployed, we risk another lost generation,” said Tony Wilson, director of the Institute for Employment Studies.
Some 363,000 people are classified as long-term unemployed after being out of work for a year or more, but with a similar number in the six to 12 month bracket, that number could soon rise sharply.
The UK economy shrank by almost 10% in 2020, a bigger drop than almost any of its European peers, having locked in later and longer than many of them.
But helped by the rapid rollout of COVID-19 vaccinations, it is lifting its third lockdown as other countries in Europe recently tightened their restrictions.
The ONS said there was a marked increase in vacancies in March, especially in sectors such as hospitality, which reopened outdoor activities last week.
In March, Finance Minister Rishi Sunak extended his leave program – which pays the wages of about one in five employees – until the end of September, although employers will have to start contributing to some of its costs from July.
Without the program, the unemployment rate would be much higher – a year ago UK budget forecasters said it could reach 10%.
The Bank of England will monitor how many jobs are lost when it expires, while assessing how much time it needs to keep its massive economic stimulus package in place.
Suren Thiru, head of economics at UK chambers of commerce, said long-term unemployment, especially among young people, could mean progress towards pre-pandemic levels in the labor market lags behind to the broader economic recovery.
“Additional measures will be needed to support the labor market when the leave program ends, including helping companies recruit and retain staff through a temporary reduction in employers’ social contributions,” he said. .
Britain’s overall wage growth measure again rose sharply in the three months to February, up 4.5% year-over-year.
But the ONS said the reading was skewed above by a drop in lower-paying, part-time jobs. After taking this into account, wage growth was much lower at 2.5%, she estimated.