June 2020
This briefing sets out analysis of the ONS labour market statistics for Wales, released on the morning of 16th June 2020. The data cover the number of people claiming benefits up to May 2020, and the employment figures for the period February – April 2020.
David Hagendyk, Director of Learning and Work Institute Cymru
Wales faces an unprecedented jobs challenge with the latest figures suggesting the sharpest rise in unemployment on record. In just two months, the claimant count has nearly doubled to over 118,000 and it stands at the highest level since August 1994..
“The picture now starting to emerge is that those areas that entered the crisis with the highest levels of unemployment have experienced some of the largest rises over the last two months. Without a scaling up of action and investment, the crisis could risk deepening existing inequalities further.
“With a second wave of unemployment likely in the autumn as the furlough scheme comes to an end, Wales will need a comprehensive job support package and a sharp increase in the level of investment in skills and retraining.
Coronavirus crisis has triggered the sharpest rise in claimant unemployment on record in Wales
The claimant count in Wales has nearly doubled in just two months, rising from 60,265 in March to 118,600 in May(i).
Figure 1 – The claimant count in Wales has nearly doubled in two months
The claimant count has already far surpassed the levels reached in the last recession following the global financial crisis, and it now stands at the highest level since August 1994.
Figure 2 – claimant count levels back to levels of early 1990s
The increase in the claimant count has been particularly sharp among men, rising by 104% between March and May, compared to 86% among women. The increase in the claimant count in Wales of 97% was lower than that seen in England (114%) and Northern Ireland (112%), but higher than that seen in Scotland (88%)
Wales faces a ‘second wave’ of unemployment as the furlough scheme ends
The increase in unemployment would have been far larger still had it not been for the Coronavirus Job Retention Scheme. Under the scheme, the UK Government covers 80% of the cost of wages for furloughed workers, up to £2,500 a month.
Across Wales there had been 316,500 furloughed workers by the end of May.(ii)
From August, employers will be required to pay some of the wage costs of furloughed workers, and the scheme is due to be withdrawn by the end of October. Given the ongoing requirements for social distancing, and changes in consumer behaviour, it is likely that a significant proportion of these workers will be unable to return to their previous jobs. This risks leading to a second wave of unemployment in the autumn.
Spike in youth unemployment leads to concerns of a ‘pandemic generation’
There are signs of a spike in youth unemployment in Wales.
The claimant count for 16 – 24 year olds increased by 90% in two months, from 13,235 in March to 25,210 in May.
This is a particular concern, given the long term ‘scarring’ impact it can have on young peoples’ employment and earnings prospects. We risk the emergence of a ‘pandemic generation’ affected by both disrupted education and poorer labour market prospects.
L&W has called for a Youth Guarantee, so that all young people can access a job, an apprenticeship or a training opportunity.(iii)
More jobs have been lost in areas with higher pre-crisis unemployment
The coronavirus crisis has had an uneven impact across Wales, and it risks deepening preexisting inequalities.
As figure 3 below shows, areas with higher levels of claimant unemployment going into the crisis have seen more jobs lost as a result of the crisis. The claimant count increased by 3.3 percentage points in Newport and Denbighshire, and 3.6 percentage points in Conwy and Merthyr Tydfil compared to just 2.5 percentage points in Monmouthshire.
Figure 3: Increase in unemployment by local authority ranked by pre-crisis unemployment
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i The latest official ONS employment and unemployment data cover the period February – April 2020. This does not yet show the impact of the Coronavirus pandemic, as employment is unchanged on the previous quarter, and unemployment is down 0.3%. The claimant count provides more up to date data, up to May 2020. The claimant count is a measure of the number of people claiming benefits, principally for the reason of being unemployed, based on administrative data from the benefits system.
ii HMRC, https://www.gov.uk/government/statistics/coronavirus-job-retention-scheme-statistics-june-2020 iii L&W, Emergency Exit: Howe we get Britain back to work
We need a Plan for Jobs to reverse the rise in unemployment and get Wales back to work
L&W has called for a ‘Plan for Jobs’ to reverse the unprecedented rise in unemployment and help get Wales back to work. This should include:
- Scaling up of existing programmes, such as Jobs Growth Wales and React, to support people back into work. This should include a significant expansion of support for the tens of thousands of furloughed workers in Wales at risk of losing their jobs
- Large-scale investment and incentives to create jobs with shovel-ready and jobs-rich schemes brought forward;
- A Youth Guarantee to prevent a rise in long-term youth unemployment, by providing all young people with an apprenticeship, a job, or a training place