Labour market defies summer slowdown in economy as employee job levels surpass pre-pandemic levels

The jobs recovery continued in August, despite the wider economic slowdown over the summer, but there is still ground to make up ahead of the furlough scheme closing at the end of the month, the Resolution Foundation said today (Tuesday) in response to the latest ONS labour market statistics.

The Foundation notes that the number of employee jobs increased by 241,000 in August, taking total job levels to 29.1 million – above pre-pandemic levels. Employee levels still remain below pre-pandemic levels in London (down 1.8 per cent), Scotland (down 1.0 per cent) and the South East (down 0.2 per cent), highlighting the uneven nature of the recovery.

Self-employment has also started to recover, after falling by 15 per cent at the height of the crisis.

However, with self-employment still down 700,000 since the start of the pandemic (although many of these workers are likely to have since moved into employee jobs) and around 1.5 million workers still on the furlough scheme, the labour market remains some way off a full bill of health, says the Foundation.

It adds that with up to one million employees likely to still be on furlough when the scheme closes on 30 September, there is a risk that not all of these workers will be able to return to employment straight away, and we should be prepared for a fresh rise in unemployment this Autumn.

Nye Cominetti, Senior Economist at the Resolution Foundation, said:

“While the economic recovery stalled over the summer, the jobs market continued to improve with the number of employee jobs surpassing pre-crisis levels.

“But with self-employment down 700,000 and 1.5 million workers still on furlough, there is still ground to make up in the labour market.

“With the furlough scheme ending in little over two weeks’ time, we should expect a fresh rise in unemployment this Autumn, particularly among furloughed staff that aren’t able to return to their previous jobs.”