The pandemic has had a significant impact on unemployment around the UK. With many businesses closing or suffering, it’s no surprise that for some months, things didn’t look good for workers.
Reasons to be optimistic
The latest figures from the Office for National Statistics (ONS) suggest the job market is showing some early signs of recovery.
The ONS figures show that the unemployment rate from January to March was 4.8%. That’s still about 0.8% higher than before the pandemic started, but 0.3% lower than the previous quarter.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, points out that while we might not be out of the woods just yet, the overall news is good: “Overall unemployment is down slightly, employment is up and the redundancy rate has fallen by a record during the quarter.”
What the numbers say
The ONS paints a positive picture for the months to come, even though current numbers are still down from pre-pandemic levels.
Almost 20% of the UK workforce was on furlough in March but since then and there are more long-term unemployed than before the pandemic. On the other hand, there are fewer people on short-term unemployment (under six months) than during the previous quarter.
And while some industries saw a pay growth of up to 4%, pay for accommodation and food services fell by 7%.
The takeaway? According to Coles, we’re not out of the woods just yet: “Before anyone breathes a sigh of relief, they’ll have to hold their breath for what comes next. Right now, one in five of the workforce is relying on the furlough scheme to keep them in a job.”
Once the furlough scheme ends, a number of people might be made redundant if their employers cannot continue to pay their full salary.
If the reopening of the economy goes to plan, however, employment will continue to grow. According to Coles, “The Bank of England forecasts that by the end of the furlough scheme, just half a million people will be taking advantage of it, so the unemployment rate will peak at 5.5% this autumn – well below its previous predictions.”
Not everybody is in the same place
Coles point out that people who have been unemployed for less than six months are in a better positioning than those who have been out of work for longer. She explains: “Finding your way back from long-term unemployment is particularly difficult.”
As the economy comes out of hibernation and starts to grow again, this might be a good time to look at your current debts.
If you’ve had a tough time during the pandemic and have credit card debt as a result, you need a plan to deal with it. You could start by looking at
Once you get your debts under control, look into rebuilding your emergency fund or adding to your savings. Research shows you’d be in good company. More than 20 million Brits plan to save more of their income post-pandemic.
To get started, set realistic saving goals and automate your savings. You can easily set a Direct Debit to your savings account once a month to see your funds grow without even thinking about it.
