Can Government Programs Continue to Prop-up UK Unemployment?
The UK’s unemployment rose to 5.0% last November, its highest since 2016. As the pandemic continues to take its toll on the economy, the UK has gone back into a lockdown once again and the country remains reliant on government stimulus to help hold up the economy. But how much longer can this continue? With public debt rising to its highest levels in decades, concerns as to whether the government can sustain jobs support are at the forefront of discussion.
Thanks to the Job Retention Scheme put forth by the current administration, unemployment has been held at bay. Official figures estimate that the scheme supported 2.4 million jobs as of last October, down from a peak of 8.9 million from last May. This is the UK’s most expensive Anti-Covid-19 support policy, which costs around 46.4 billion pounds. Nonetheless, Finance Minister Sunak has been urged by economists to extend support for jobs in the new budget plan to be presented this March.
UK unemployment could potentially reach 2.6 million by the middle of 2021, according to the Office for Budget Responsibility (OBR). That is 7.5% of the working-age population. The latest official statistics showed a truly mixed picture. Employment numbers only decreased by 88,000 by the end of last November, the smallest fall since the start of the pandemic, and less than the 100,000-drop forecasted by economists. Official data also showed that wages grew by an annual 3.6%, the highest rise in over a year. The total number of hours people worked continued to increase as parts of the economy reopened. And the average amount people earned fell sharply during the crisis, but it rose 3.6% in the latest polls. Unfortunately, the number of advertised vacancies fell 10% from October to December as new lockdowns reduced hiring.
New support programs and benefits are to be introduced in Sunak’s March proposal, but forecasts indicate that lockdowns are here to stay for a while and jobs are most likely still going to take a significant hit. Continued government support will remain on shaky ground.