20 Apr Young and broke: the unemployment problem for under 25s in London
see unemployment is back below 5%, so that’s good news right?
It is, but don’t get carried away. Some sectors of the population, and some regions, are faring far worse than others. Notably, the under 25s in London, probably because they are most likely to be looking for work in sectors that have been shut: bars, restaurants, theatres, other performance industries.
The 18 to 24 age group has seen the greatest decrease in pay-rolled employees since March 2020
Becky O’Connor, head of pensions and savings at Interactive Investor, said: “Beer gardens have may have opened up in the last week or so but the latest jobs data is yet to reflect the re-opening of some parts of the economy.
“Many young people will be getting back to work in the sectors that have been hit hardest over the coming weeks and starting to repair the damage done to their finances through months of lost or reduced income.”
Kate Smith, Head of Pensions at Aegon, makes the point that the increase in unemployment for younger will have knock-on consequences for long-term financial security. Aegon analysis shows that for a 25-year-old employee on average earnings, stopping pension contributions for just 3 years could mean losing out on £15,500 at state pension age.
What are the wider stats?
The ONS (Office for National Statistics) said unemployment was at 4.9% in the three months to February, down from 5% in January.
But in the year to March,811,000 jobs were lost in the UK, with under-35s accounting for a brutal 80% of those cuts. There are 1.67 million unemployed people in Britain, down 50,000 on the last quarter but up 311,000 on a year ago.
There are a further five million people still employed, but on furlough, a major headache for Chancellor Rishi Sunak.
Tej Parikh, Chief Economist at the Institute of Directors, said:
“While the labour market continues to battle with the pandemic, there are signs it is turning a corner. The Job Retention Scheme is doing a lot of heavy lifting and is helping to keep a lid on jobs losses. Over 2021 the unemployment rate will creep upward as firms tend to weak balance sheets and furlough support ends in September. Nonetheless, the green shoots of a recovery in the jobs market are emerging.”
Yes, and the hope is that there will be a surge over the summer. That does depend on vaccine success and how deadly new variants of the virus prove to be.
Josie Dent, managing economist at the CEBR, said:
“Single-month figures suggest that job vacancies began to grow again in March 2021, rising from 562,000 in February to 650,000.
This 16% increase was likely in anticipation of lockdown restrictions lifting. Last month’s rise in vacancies came after a 3% contraction in February, and takes the number of vacancies to its highest level since March 2020.
The biggest rises were seen in professional services, construction and hospitality. The hospitality industry in particular will have been recruiting in the hopes of a large resurgence in demand as outdoor venues were permitted to open on 12th April. Despite the fall in March payrolls, this increase in vacancy levels suggests that employment levels will rise again as social distancing is eased.”
How did this affect markets?
The pound went above $1.40 against the US dollar today on signs things are picking up.
Neil Wilson at markets.com says: “Retail footfall and consumer spending is picking up rapidly. Of course, all this data is massively skewed by interventions – furlough masks the true employment situation, arbitrary reopening dates skew spending to the first few days and weeks as the pent-up demand is let out. Nevertheless, these are encouraging signs.”
The FTSE 100, which passed 7000 recently, has slipped back below it to sit down 88 points at 6911 by mid-afternoon on Tuesday.