Unemployment claims in UK increased by 70% amid coronavirus pandemic

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Unemployment claims in UK increased in April as the coronavirus pandemic causes more job losses in the country.

The latest data showed that individuals claiming jobless benefits in the UK soared in April. The unemployment claims in UK rose by 856,500 to 2.097 million.

According to the Office for National Statistics (ONS), the increase reflects a monthly increase of 69.1%. Meanwhile, a Reuters poll of economists had presented a median forecast for an increase of 676,500 in the claimant count.

However, the ONS said that improvements to “Universal Credit” as part of the UK government’s response to COVID-19 suggested that more people are qualified for unemployment-related benefit support, even if they were still employed. Universal credit refers to a social security payment that covers six benefits.

“Consequently changes in the claimant count will not be due wholly to changes in the number of people who are unemployed. We are not able to identify to what extent people who are employed or unemployed have affected the numbers,” the ONS said.

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The UK unemployment rate recorded a little higher at 3.9% in the January-March period. The rate rose by 0.1 percentage points from a year earlier and has been 0.1 percentage points higher than in the last quarter of 2019.

Employee retention

The UK rolled out its furlough scheme called “Coronavirus Jobs Retention Scheme” (CJRS) to keep businesses from letting go of their personnel amid the coronavirus pandemic.

The government aids employers in covering 80% of an employee’s salary, up to a maximum of £2,500 per month. The scheme appears to work and will take effect until the end of October.

Kallum Pickering, senior economist at Berenberg Bank, said that despite implementation of the CJRS, he believes the unemployment rate will rise by around 9.5% in the late second quarter from the 3.9% rate in March.

“That implies a rise in the number of unemployed workers to around 3.3 million from the circa 1.35 million in March – far exceeding the previous peak of 2.7 million in October 2011 in the wake of the financial crisis,” he said.

Meanwhile, the increase will be much smaller than it would have been without the CJRS, he added. “Around 7.5 million furloughed workers are receiving wage subsidies through the scheme which has been recently extended until October. From August onwards the scheme will be adjusted to allow workers to return to work part time.”

Global unemployment loss

The International Labor Organisation (ILO) said that job loss due to coronavirus may hit nearly half the global workforce.

About 1.6 billion informal workers may become at risk of losing income due to the effects of the coronavirus pandemic.

Th figure from ILO accounts for nearly four-fifths or 76% of the total 2 billion people in informal work. This is almost half of the entire workforce, of 3.3 billion people, around the world.

The informal economy covers jobs which typically offer little protection, such as for income in case of sickness or lockdown.

Analysis shows that people in this group remained at risk of losing income. Workers were from high-risk industries, such as retail and food, which the coronavirus pandemic will likely hit. The ILO noted that there were more informal workers in developing countries.

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