With over 600,000 jobs lost, UK unemployment worse than Great Depression

The actual spike in unemployment would have been much higher were it not for the British govt's Job Retention Scheme, which has been paying a high proportion of the salaries of nearly 9 mn people

The number of people in the UK claiming job-related benefits increased by a monthly 23.3% in May to 2.8 million, according to official figures released Tuesday that likely underestimate the toll on the labour market of the coronavirus lockdown.

The statistics agency also said the number of people on payroll fell by 2.1%, or 612,000, between March and May.

The Office for National Statistics said that the so-called claimant count - which includes both people who work on reduced income or hours and those who are actually unemployed - was 125.9% higher than in March, when the country was put into lockdown.

"If the public health crisis is just starting to ease, today's figures show that the unemployment crisis is only just beginning," said Tony Wilson, director of the Institute for Employment Studies.

Wilson said that unemployment is rising faster than during the Great Depression in the 1930s and is set to top 3 million this summer.

The actual spike in unemployment would have been much higher were it not for the British government's Job Retention Scheme, which has been paying a high proportion of the salaries of nearly 9 million people.

Many companies have held off from cutting jobs during the lockdown as a result of the scheme, under which the government pays up to 80% of the salaries of workers retained, up to 2,500 pounds ($3,150) a month.

Treasury chief Rishi Sunak has said that from August, firms will have to start making contributions to the salaries of workers that are retained but not working, and that the scheme will close two months later.

That's raised concerns that Britain will see a spike in unemployment then. In total, 8.9 million jobs have been furloughed under the scheme by 1.1 million employers at a cost to the government of 19.6 billion pounds ($25 billion).

"The furlough scheme continues to hold off the bulk of job losses, but unemployment is likely to surge in the months ahead," Tej Parikh, chief economist at the Institute of Directors, said.

The furlough scheme is due to run until the end of October although employers have to make contributions to the cost of paying their temporarily laid-off workers from August.

Many companies have already announced permanent layoffs of workers. On Monday, building materials firm Travis Perkins said it would cut about 9% of its workforce or 2,500 jobs. Airlines have shed more than 15,000 jobs in Britain.

Some of those furloughed workers will have returned to their jobs on Monday, as a result of the reopening of nonessential shops in England for the first time in nearly three months.

It's clear that not everyone will be able to sidle back into their jobs given that many firms are likely to go bust as a result of the lockdown. Figures last week showed the British economy shrank by a massive 20% in April alone.

"Unions and employers are urging more support from the government. Sunak is expected to announce a big fiscal stimulus in the coming weeks. Unemployment falls unevenly across society and leaves scars that last generations," said Matthew Percival, director of people and skills at the Confederation of British Industry.

The urgent priority must be creating inclusive jobs today, by turbo charging the sustainable industries of tomorrow.