
See our research and analysis on the changing world of work in the UK and how this plays out differently in cities and large towns across the country.
Research Intern Andrei Savitski analyses the most recent claimant count data and sets out what now must happen to ensure a swift bounce back of the economy
Our most recent update of claimant count data for the Centre for Cities UK Unemployment Tracker suggests that our cautious but sombre prognosis on post-furlough unemployment may have, luckily, been avoided. The claimant count has continued to fall in the month between September and October 2021 across all but one city, although claimant rates remain relatively high. We offer an overview of the most recent claimant count data and propose three potential reasons for the observed trend.
Data on claimant count, released last week, suggest that Slough is the only one of 63 cities in the UK where the claimant count rate increased. Nationally, the claimant count rate decreased by 0.09 percentage points in this period. Although a minor reduction on the previous month, this is, nonetheless, in contrast to some predictions of increased unemployment once the CJRS would be phased out for 1.14 million people.
Interestingly, the trends for this month did not have a noticeable geographic pattern in terms of cities’ locations or industrial composition. One rationale is strong national job growth being felt across cities, as suggested by the latest HMRC payroll data. It could also be that the end CJRS simply did not have a strong geographic effect in terms of unemployment.
We propose three possible reasons that may explain the decrease in the claimant count across almost all cities (bearing in mind that HMRC data are residential, not workplace-based).
Most importantly, most furloughed workers remained in work. Our calculations based on HMRC and Business Impact of Covid-19 Survey (BICS) data (see Figure 1) imply that the bulk of furloughed employees – 87.1% (986,793) – had stayed with their employers, on varying terms. Although it is unclear what share of these jobs will be viable in the medium or long term, preliminary findings support the notion that the CJRS had not simply been keeping ‘dead’ jobs afloat.
In fact, only 3.2% (37,020) of all furloughed employees in the UK were reported to have been subject to redundancies. A further 10.0% (114,514) had voluntarily left their job or had unspecified outcomes. Yet, as concluded by the Resolution Foundation, it is possible that a significant share of this, latter subgroup had left the labour market altogether, while others could have moved jobs. Redundancies are, thus, unlikely to have impacted city’s claimant count trends, particularly given the practical universality of reductions in claimants.
Sources: HMRC, 2021; Business Impact of COVID-19 Survey (BICS), 2021
Nevertheless, because 13.2% (151,534) of furloughed employees could have potentially become claimants, it is important to consider the reasons why this has not been the case.
First, not everyone was eligible for benefits. HMRC’s estimates indicate that on the last day of CJRS, 1 in 8 employees had a pre-furlough income of more than £35,000. Similarly, many full-time students and recent, lower-skilled immigrants would not have been able to claim. Likewise, those receiving redundancy payments or still serving notice periods may not yet be able to claim income-related benefits, due to a ‘high’ October income. We expect that next month’s statistics will reveal the extent and geographic impact of this (or absence thereof).
Second, some furloughed employees would not apply for unemployed-related benefits. HMRC estimates that on 30 September, 31.2% of furloughed employees in the UK had a pre-furlough annual income of £10,000 or less. It is there reasonable to assume that some of these ‘lower earning’ individuals would either have partners in full-time work, a second job, or already be in receipt of relevant benefits.
Although the continued fall in unemployment is welcome and shows urban and national economies are recovering, it is still too early to celebrate. On average, cities had an October claimant count rate 1.8 percentage points higher than in March 2020, and York remained the only city with a claimant count rate below its pre-pandemic level. Cities most affected by lockdowns, particularly airport hubs (e.g. Crawley and Luton), still have really high (relatively) claimant count rates. Undoubtedly, the CJRS had done well to protect cities’ economies from the effects of lockdown, and its phasing out seems to have gone smoothly. Now, to ensure a swift and maximal bounce back of the economy, the Chancellor will need to assist people, both in and out of the labour market, in returning back to work – not just those who lost their jobs post-CJRS, but all those affected by Covid-19 since March 2020.
See our research and analysis on the changing world of work in the UK and how this plays out differently in cities and large towns across the country.
Centre for Cities tracks the latest unemployment claim statistics across the UK's cities and largest towns.
There were still 1.1 million people on furlough in September, and almost one third of them were in London, Birmingham and Manchester.
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