U.K. Wage Pressures Set to Persist as Furloughed Staff Keep Jobs
U.K. unemployment rose by 150,000 after the end of furlough, according to official figures that suggest labor shortages will persist and strengthen the case for the Bank of England to raise interest rates.
The government’s coronavirus job support program, which part-paid wages since the start of the pandemic in March 2020, closed at the end of September with 1.14 million people still using it, HM Revenue & Customs data showed.
A separate Office for National Statistics survey of employers found that 87% “returned to work”, with the rest either made redundant, leaving voluntarily or unaccounted for.
The estimated rise in joblessness is below the 180,000 projected by the government’s fiscal watchdog in its forecasts at last week’s budget and is likely to add to pressure on the Bank of England to raise interest rates.
BOE policy makers did not see the ONS survey data before this week’s vote, which will be published at noon in London, according to a spokesman. Markets are expecting a rate increase from 0.1% to 0.25%.
“The labor market has not tanked as the program ended, clearing the way for stimulus to be withdrawn this year,” Bloomberg Economics’ Jamie Rush and Dan Hanson wrote in a report after the data.
“With the main risk to the labor market having receded, if there’s no rate hike now there will certainly be one in December,” they said.
With vacancies running at a record-high of 1.3 million, many of those coming off furlough are likely to have found jobs relatively quickly, Tony Wilson, director of the Institute for Employment Studies, said.
The HMRC data showed that 500,500 of those on furlough at September 30 were already working part-time. Of the 1.14 million total furloughed employees, 414,000 were in companies with fewer than five staff.
The data also showed that 85,000 of furloughed workers were over the age of 60, and 150,000 were over the age of 55.
The ONS survey also showed:
- 65% of those furloughed returned to work on the same hours
- 6% increased their hours, 16% reduced their hours, 3% were made redundant
- 3% left their role voluntarily and the rest were unaccounted for.
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