MNI DATA IMPACT: UK Earnings Growth Slows Ahead Furloughs

--Hours Worked Lowest Level Since Financial Crisis, Even as Scheme Retains Jobs

By Laurie Laird

     LONDON (MNI) - Headline measures of the UK labour market show a collapse in

hours worked, even as government schemes have protected employment, while

earnings growth showed a significant slowdown, even before the furlough scheme

took full effect.

     The following are the main points from the latest labour data released on

Tuesday by the Office for National Statistics.

     --The claimant count surged by a record-high 856,500 in April, taking the

number of claimants to the highest level since July 1996. That lifted the

claimant rate to 5.8%, the highest since February 1997. However, after the

introduction of Universal Credit, the claimant rate may include still-employed

workers who qualify for other income support measures.

     --Hours per employed worker (including those on furlough) fell to 24.8 by

the final week of March, according to a new series developed by the ONS. That's

the lowest in the history of the weekly series, which stretches back to 2008. An

ONS spokesperson suggested that statisticians are looking closely at the hours

worked series as a true picture of the labour market, given the distortions of

the furlough scheme.

     --Earnings growth decelerated sharply, even though the furlough scheme had

little effect on the Q1 data, according to a national statistician. Wages grew

by 2.4% in the Jan-March period, the slowest pace since Q2 2018, down from 2.8%

in the three months to February. Wages increased by an annual rate of 1.5% in

March, lowest since February of 2015, due to a reduction in bonuses paid at the

end of the first quarter, according to a statistician. Regular earnings declined

by 0.2pp to 2.7% in Q1, also the slowest pace since Q2 2018.

     - The job retention scheme, which guarantees 80% of furloughed workers'

salaries up to a cap of GBP2,500 per month, did not play a significant role in

the Q1 earnings slowdown, according to the statistician, with the programme is

likely to hit earnings in April and beyond.

     - Vacancies declined by a record-high 170,000 in the three months to April

to 637,00, the lowest level since Q1 2014.

     - The employment data were largely collected by the week ending March 29th,

although a statistician reported a significant reduction in response rates

during the last three weeks of that period, leading to a re-weighting of data

collected at the end of the quarter.

     - The number of workers payed through a PAYE scheme declined by 1.2%

between April and May, and by 1.6% over May of 2019, according to a new series

compiled by the ONS.

     - Data now regarded as ancient history showed the labour market in fine

fettle before the coronavirus shock. Employment rose by 211,000 in the first

quarter, leaving the employment rate at a joint-record high of 76.6%.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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