Is furlough holding back the jobs market?

The latest employment figures, published this morning, confirm a remarkable aspect of the Covid pandemic: that it appears to have caused no more than a little bump in the jobs miracle of the past decade. That is in spite of the economy shrinking by nearly 10 per cent in 2020 — a performance that in the past would have led to millions out of work. In May the unemployment rate fell by 0.3 per cent to 4.7 per cent. By contrast, it reached over 8 per cent during and after the 2008 financial crash.

But of course, the unemployment figures don’t tell the whole story — not when we have a furlough scheme in operation, something that was absent from previous economic crises. To put the situation into perspective, in May there were 1.66 million people unemployed. On 30 April, however, there were a further 3.4 million people on furlough. The numbers on furlough have certainly fallen as the economy has reopened — it shrank by 900,000 alone during April.