UK unemployment rate dips to 4.8 per cent

DESPITE strict coronavirus lockdown, the unemployment rate in the UK has dipped to 4.8 percent in the first quarter, the Office for National Statistics (ONS) said in a statement on Tuesday (18). 

The unemployment rate of 4.8 percent is down from 5.1 percent in the final quarter of 2020, when Covid-19 cases soared, causing new restrictions to be put in place in January. The number of people in employment in the first three months of 2021 jumped by 84,000, which is the first-ever increase since the pandemic hit Britain.

"The renewed lockdown at the beginning of 2021 saw a sharp rise in the number of previously unemployed people no longer looking for work, helping the unemployment rate fall on the quarter,” Darren Morgan, director of the Office for National Statistics (ONS), said in a statement, adding that employee numbers rose strongly in April as the economy began to reopen.

"With many businesses reopening, the recent recovery in job vacancies continued into April, especially in sectors such as hospitality and entertainment," said Morgan.

The dip in the unemployment rate appears to be an effect of the UK government's job furlough scheme.

The job outlook has improved significantly in recent months, with the government announcing plans to fully reopen the economy by June 21 and also extending wage support for furloughed workers until the end of September.

While the government is paying the bulk of wages for millions of private-sector workers during the coronavirus pandemic, some economists feel that the rate will surge once the furlough scheme, which has cost more than 60 billion pounds so far, ends later this year. As pointed out by Capital Economics analyst Thomas Pugh, "the government's job furlough scheme is still insulating the labour market from the worst effects of the pandemic.”

The central bank now reportedly expects unemployment to peak at just 5.4% in the third quarter of 2021 instead of a previously estimated 7.9%.