Unemployment up a tad to 4%. Job vacancies and pay growth down a fraction. Britain’s latest official labour market figures are a bit like the Domesday Book: comprehensive and rich in detail but of historical interest only.
The contrast between the US and the UK is stark. On the other side of the Atlantic economists can already have a reasonably good shot at estimating the impact of Covid-19 on unemployment because there are weekly updates on the number of people filing jobless claims. In the past four weeks, these have totalled 22 million.
Rishi Sunak’s furlough support scheme fails to reassure Britons
In Britain, the statistics are not nearly so timely. The April overview from the Office for National Statistics covers the three-month period from December to February, a now bygone age of general elections, Brexit deadlines and floods.
In response to the crisis, the ONS has launched an online survey designed to come up with real-time data. But this doesn’t tell us much either. The US jobless claims are a genuine flash estimate: they provide information about what was happening last week, whereas the UK figure doesn’t even give a full picture of what was happening last month.
This is a point made by two labour market experts – David Blanchflower and David Bell – in a study due to be published by the National Institute of Economic and Social Research later this week. They estimate that the US unemployment rate will have risen almost five-fold in April to 20%. Given the paucity of data, all they can reliably say about the UK is that it has gone up a lot, but they have a stab at an estimate nevertheless.
On the assumption that furloughed workers are in reality unemployed, Blanchflower and Bell predict unemployment in the UK will rise by 5 million to more than 6 million by the end of May. If they are right, this would give the UK a jobless rate similar to that of the US – about 20%.
The government would argue that the whole idea of the furlough scheme is to ensure that the lockdown does not result in a massive increase in unemployment. But Blanchflower and Bell are right to say that furloughed workers are really an army of the hidden unemployed, and they will become a lot more visible if during the second half of this year, the government ends the wage subsidies but the economy does not snap back as quickly as ministers hope.
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