Coronavirus creating 'turbocharged' recession with second wave of redundancies due in autumn
CORONAVIRUS has created a turbo-charged recession, with unemployment more than doubling in two months.
The latest labour market data showed another 5,700 new unemployment claimants during May, bringing the total to 65,200, or seven per cent of the workforce.
It’s the highest peak since March 1997, marking a 119.5 per cent increase from the 29,700 claimants recorded during March.
The figure includes people claiming Jobseeker's Allowance and those on Universal Credit who were claiming principally for the reason of being unemployed.
Ulster Bank’s chief economist Richard Ramsey said it took three years from the last recession to reach the same number of new unemployment claimants that have been recorded in just 61 days in 2020.
“What is most striking about this recession is the speed and the scale of the rises in unemployment. They are turbo-charged,” said the economist.
However, he said the claimant count in 2020 now covers a broader range of people than it did in previous decades.
While the 10 per cent increase in new claimants during May is well below the 89 per cent spike in April, the true impact of the coronavirus lockdown on the labour market may be unclear for several months.
Last week HMRC confirmed that 212,000 people in the north had been furloughed under the UK Government’s Job Retention Scheme at the end of May. Another 69,000 claimed £198m in support under the Self Employment Income Support Scheme (SEISS).
Together, the 281,000 represent around 30 per cent of all employment.
The furlough scheme, which will gradually be wound down from August, will come to a close at the end of October 2020.
“With the health emergency receding, signs of the economic emergency are unfolding,” said Mr Ramsey.
A total of 342 redundancies were proposed during the month of May according to the latest labour market data, down from the 783 proposed during April.
But, the number of job losses proposed during the first two weeks of June hit 1,427.
Two major aerospace companies, Thompson Aero Seating and Bombardier alone announced plans for 1,100 redundancies this month.
Other major employers are expected to follow suit over the coming months.
“With vacancies plummeting and the government support schemes due to lapse, a second wave of redundancies can be expected in the autumn,” said Mr Ramsey.
“Unemployment will likely be on an upward trend for the next 12 months. The task of bringing it back down will be a top economic priority for the foreseeable future.”