Ticking time-bomb of unemployment across Shropshire and Mid Wales

The latest Office for National Statistics figures for the three months to April actually showed a fall of 8,000 in the regional unemployment figure to 141,000 with the unemployment rate at 4.8 per cent of the working population.

But across the region the number of people temporarily away from work, including those furloughed, has soared.

The removal of furloughing is expected to lead to a surge in unemployment as many may not have a job to go back to.

In Shropshire, the ONS figures show numbers claiming unemployment benefits claims were up 1,875 to 9,150, with Telford and Wrekin up 980 to 7,135, and Powys up by 765 to 3,650.

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Marches Local Enterprise Partnership chair Mandy Thorn said the latest unemployment figures were not as bad as some had predicted, although the true picture was unlikely to emerge until wage support schemes end in October.

“I fear that these figures could get worse before they start to get better and that we will only see the full scale of the damage coronavirus has wrought to our economy when the Coronavirus Job Retention Scheme closes on October 31,” she said.

“The economy has been dealt a once-in-a-lifetime blow and it will take a lot of hard work and effort for it to recover. The Marches LEP is already working with its partners to draw up a recovery strategy for the region and lobbying Government to ensure the voice of business across the region is heard and responded to.

“We have made available an additional £1.56 million across the region to help those hardest hit by the pandemic and the February floods. The money has been allocated after consultation with Shropshire and Telford Business Boards to ensure it goes where it is most needed.”

“Shropshire Council has been given £737,000 by the LEP and Telford & Wrekin Council £404,000 to fund targeted activity to help businesses in the retail, tourism and leisure sectors, new grants for businesses which have slipped through the net and funding to kick-start the visitor economy. It is vital that we continue to work to invest in our people, their skills, training and education so that they can fulfil their potential and help rebuild a new, sustainable economy across the region.”

Nationally, the ONS said early estimates showed the number of paid employees dropped by 2.1 per cent or 612,000 in May compared with March. The number of people temporarily away from work, including furloughed workers, rose by six million at the end of March into April.

Meanwhile, jobless claims under Universal Credit jumped 23.3 per cent month-on-month in May to 2.8 million and soared 125.9 per cent or 1.6 million since March when the UK was placed in lockdown.

Karen Whitehead, of KEW Accountants in Telford, said: “From what I am seeing in my practice there are a large number of self-employed people whose income has been wiped out, and are therefore having to claim universal tax credits, which will have boosted these figures.” I would imagine that once we are out of this lockdown their incomes, in a lot of cases, will return.

“However, for employees I think we may well see a long-term increase in the number that find themselves out of work.

“From the beginning of August, employers are going to have to contribute to the furlough scheme and I think there will be a number that simply cannot afford to and will have no choice but to make redundancies.

“I also think that while we have been in lockdown, businesses have been using technology in order to make efficiencies and I do think these businesses may be able to operate with reduced staffing levels.

“These statistics make sad reading for the individuals that are involved, but we are also seeing a large number of people who are seeing opportunities in this adversity and actually setting up in business.”

Ben Vaughan, Shropshire employer adviser manager at Jobcentre Plus, said from March 1 to May 26 the Department for Work and Pensions had received more than three million individual claims for Universal Credit across Great Britain.

“Although we have seen the amount of claims to Universal Credit made across Shropshire and Telford and Wrekin decrease between April 9 and May 14, we are continuing to see significant numbers being made in all our constituencies, with rises of overall Universal Credit claimants in all of between 40 per cent and 50 per cent,” he said.

“With many of our employers opening their doors for business again this week, Job Centre Plus’s teams of work coaches in Shropshire and Telford and Wrekin are continuing to focus their support on helping all our claimants return to work as soon as possible,” he added.

Midlands unemployment to double over summer

An economist is warning that unemployment across the Midlands could double over the summer

The head of research at the Midlands Economic Forum, Paul Forrest, said the latest unemployment figures for the three months to April – a rate of 4.3 per cent of the working population in the region – do not fully reflect the impact of the coronavirus at a regional level.

He said that the claimant count has accelerated from 144,350 in March in the West Midlands to 265,030 by May.

Mr Forrest said that overall in the Midlands, the latest data records the total number of furloughed staff as 1.26 million, equivalent to 23 per cent of the economically active.

"Assuming a doubling of the unemployment rate, those unemployed and furloughed leave an overhang equivalent to over a third of the economically active.

"For instance, in the metropolitan West Midlands – the West Midlands Combined Authority area – this is equivalent to 37 per cent of the economically active.

"In addition, with between a fifth and a quarter of the labour force currently furloughed, close to 37 percent of the active labour, in Birmingham for instance, is not directly producing output."l, unemployment rose 0.1% to 3.9%, and the employment rate increased by 0.3% to 76.4%.

Full impact ‘to be felt at end of year’

Economists believe the full impact on employment will not be felt until wage support schemes end in October. They say businesses are now having to assess how they must change to survive long-term.

Fiona Cincotta at Gain Capital said: “Whilst the Government’s furlough scheme offers an unprecedented amount of support to the UK labour market, we can expect to see this start to unravel in the coming months as the scheme is gradually withdrawn.”

Tej Parikh, of the Institute of Directors, added: “The furlough scheme continues to hold off the bulk of job losses, but unemployment is likely to surge in the months ahead. Wage support has given firms some much-needed time to regroup.”

Matthew Percival, CBI director of people and skills, said: “We can now clearly see the significant impact the virus is having on the labour market already. Over 600,000 people were taken off payroll between March and May, vacancies fell by the largest amount on record on the quarter, and hours worked fell at the fastest pace on record over the year.

“Unemployment falls unevenly across society and leaves scars that last generations. The urgent priority must be creating inclusive jobs today, by turbo charging the sustainable industries of tomorrow. This should be backed by a revolution in retraining, with business, government and education providers stepping up to reskill communities for the future.”