Jobless rate drops and payroll workers rise as lockdown lifts

UK workers on payrolls surged for the fifth month in a row in April as Britain’s economy began to spring back to life thanks to easing lockdown restrictions, official figures have shown.

The Office for National Statistics (ONS) said the number of payroll workers rose by 97,000 between March and April, while it added that job vacancies also continued to increase as shops and outdoor dining reopened last month.

The latest figures show that the overall rate of unemployment fell once more, to 4.8% in January to March – the largest quarterly decrease since September to November 2015 and down from 4.9% in December to February.

This came despite the country being in tight lockdown in the first three months of 2021, with the ONS saying many unemployed were no longer looking for work.

But the data also showed the toll taken by the crisis on the jobs market, with 772,000 fewer UK workers on payrolls than before the pandemic struck last spring.

Darren Morgan, director of economic statistics at the ONS, said: “The number of employees on payroll rose strongly in April as the economy began to reopen, continuing the improvement from its November trough.

“There remains, however, three quarters of a million people fewer on the payroll compared with the pre-pandemic peak.

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

UK unemployment rate
(PA Graphics)

There were 1.6 million Britons unemployed in January to March, down 121,000 on the previous three months, according to the ONS.

But there were 32.5 million in employment, up 84,000 on the previous three months in a sign of resilience in the face of lockdown.

The ONS added that estimates showed vacancies lifted once again in early April to recover close to pre-pandemic levels as firms began rehiring ahead of an expected surge in pent-up consumer demand.

Chancellor Rishi Sunak said: “Protecting and creating jobs continues to be my top priority.

“While sadly not every job can be saved, nearly two million fewer people are now expected to be out of work than initially expected – showing our Plan for Jobs is working.”

UK payroll employees
(PA Graphics)

The Bank of England recently slashed its forecasts for unemployment over the year, now predicting that the jobless rate will peak at 5.5%, down from the 7.75% previous forecast thanks to a more rapid recovery expected in 2021.

It said the UK is set for the best year of growth since 1941, hiking its growth outlook to 7.25% in 2021.

The extension of the furlough scheme has helped soften the blow to unemployment, while the growth rebound is set to see most furloughed employees return to work when it ends.

But Samuel Tombs, at Pantheon Macroeconomics, cautioned that some hard-hit sectors will continue to suffer once furlough ends.

He said: “While most furloughed staff will return to their former roles, a significant minority won’t, especially in sectors such as retail where over-employment is rife.

“We expect redundancies to pick up again from July, when employers will have to cover 10% of the missing wages of any furloughed staff, and then jump in September, the final month of the scheme.”

The claimant count – another measure that includes people working with low incomes and hours, as well as people who are not working – fell month-on-month to 2.6 million in April.

The figures also showed average pay excluding bonuses rose by 4.6% in the three months to March, yet with many jobs axed being lower-paid roles, the underlying increase is around 3%, the ONS said.