Unemployment surge ‘inevitable' in 2021 once furlough scheme ends
A SURGE in unemployment in the second half of 2021 is inevitable once the UK Government ends its major employment support schemes, a leading economist has said.
Richard Ramsey said both the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS) have continued to ‘inoculate’ the north’s economy against a severe labour market shock.
But the with measures set to end sometime in 2021, that shock will inevitably follow.
Around 68,000 jobs were furloughed at the end of October - the last official count.
That furlough scheme is set to end at the end of April 2021. But an extension to lockdown restrictions in England would likely see the deadline extended into May or June.
But once these measures are withdrawn, a sharp rise in unemployment in the second half of the year appears inescapable.
The Ulster Bank chief economist said the last labour market report for 2020 showed some signs of recovery, with slight falls in those claiming unemployment support and a downward trend in unemployment in the second half of 2020.
“Many of the indicators point to an improvement,” said Mr Ramsey. “Talk of a labour market recovery, however, is premature.
“The Chancellor recently stated that the economy is going to get worse before it gets better. “Similarly, the labour market will deteriorate before a sustainable recovery takes hold.”
Even with the labour market inoculated against Covid-19, a record 11,000 proposed redundancies were recorded in 2020.
Some 4,700 redundancies were confirmed last year, but the figure only includes cases were employers axed more than 20 jobs.
Of the 4,700 confirmed job losses, 90 per cent took place in the second half of 2020.
The largest chunk – some 1,960 – were lost in manufacturing.
The unemployment rate actually improved in the latest Northern Ireland Research and Statistics Agency (NISRA) survey, falling from 3.7 per cent in June to August to 3.2 per cent in September to November.
Richard Ramsey said: “On closer inspection, NI’s unemployment rate is falling for the wrong reasons with the number of economically inactive, i.e. those neither in work or looking for work, moving in the opposite direction.
“While the trend in unemployment during the second half of 2020 has been down, an upward trend is anticipated in the second half of 2021.”
NISRA confirmed that furloughed workers and self-employed people claiming support are unlikely to be counted among the north’s unemployed.
NISRA said furloughed workers in the north are more likely to feature among its claimant count figure, which although improving month to month, remains almost double the pre-pandemic level.
A total of 58,400 people were included in December’s claimant count, up 28,600 from March 2020.
It includes people on Jobseeker’s Allowance and Universal Credit, claiming mainly for the reason of being unemployed.