Responding to the latest official labour market statistics, showing the unemployment rate at 5.0% in the three months to January, Tej Parikh, Chief Economist at the Institute of Directors, said:
“The labour market is showing some signs of resilience in the face of covid-19.
“The pandemic has led to an unprecedented rise in job losses, but with continued support from the furlough scheme and the economy now gradually reopening, worst case scenarios are now slowly coming off the table. Unemployment will continue to edge up over the year, as cashflow remains challenging, but it is likely to peak lower than expected when the pandemic first took hold.
“Many firms are still tapping into the Job Retention Scheme to keep staff onboard, as they navigate restrictions in the first quarter. This has kept unemployment from rising even higher. The extension of furlough out to September will also provide vital support for firms as they attempt to rescale in line with the reopening roadmap. Vacancies are likely to start growing again meanwhile, as businesses look to bounce back as restrictions wind down.
“The furlough scheme is helping business to bridge the pandemic. The Government should remain prepared to extend support if the recovery goes off kilter, and boosting the UK’s retraining and reskilling capabilities will only become more important as the labour market attempts to adjust to the post-pandemic economy.”