U.K. Business Lobby Sees Sweeping Job Losses When Support Ends
(Bloomberg) -- Almost one third of businesses in the U.K. expect to cut jobs in the next three months as government support to prop up employment during the coronavirus crisis is phased out.
The British Chamber of Commerce survey will add to concerns at the Treasury and the Bank of England that the biggest employment losses are yet to come after the pandemic put the brakes on economic activity this year. Just 12% of 7,400 firms surveyed plan to increase the size of their workforce, according to the report.
Big-name companies like Boots, John Lewis and Rolls Royce have already announced reductions, but more are expected as the government’s furlough program is set to be reduced from month. About seven in 10 firms had taken advantage of that plan, according to the BCC.
Even assessing the scale of the problem could be difficult as official measures fail to give an accurate picture, a separate report by the Resolution Foundation said. Its analysis found that the U.K.’s headline unemployment index significantly understates the recent rise in joblessness, while the claimant count measure hugely overstates it.
Figures for total and average hours worked offer a clearer picture of the real state of the labor market. The Office for National Statistics exaggerates jobless claims by counting those applying for benefits who wouldn’t otherwise be considered unemployed, Resolution said.
On the other hand, the unemployment rate classifies those not actively seeking work as inactive rather than jobless. But people often don’t look for work when vacancies collapse suddenly as they did during the lockdown, the think tank said.
“Last month, figures showed that unemployment increased by either 30,000 or one million,” said Resolution Chief Economist Mike Brewer. “All we really know is that both are completely wrong. It is vital that our national statisticians provide a more accurate picture of what’s happening to people’s jobs -- however grim the reality may be.”
The ONS will publish its most recent labor-market data at 7 a.m. in London.
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