Number of workers on furlough tumbles to lowest level since start of pandemic

The number of workers on furlough has tumbled to its lowest since the onset of the Covid crisis, according to official figures published today.

Data from the Treasury shows there were 1.6m people on furlough at the end of July, down 340,000 from almost two million in the previous month.

However, the rate at which workers left furlough slowed markedly from June, when 550,000 Brits came off the scheme, which is fuelling expectations that there could be a spike in unemployment when the initiative ends in three weeks.

Charlie McCurdy, economist at the Resolution Foundation, said: “Up to a million employees could still be on furlough when the scheme closes at the end of this month.”

“While we expect most of these staff to return to their previous roles, a significant number will not, and we could see a fresh rise in unemployment this autumn.”

The biggest contributor to the drop in furloughed workers came from those aged between 18-34, falling 121,600 over the period. This group has recorded above average furloughed rates compared to other age cohorts since the scheme was launched.

Chancellor Rishi Sunak said: “It’s fantastic to see furlough levels at their lowest since the start of the pandemic with young people in particular getting back to work and kickstarting their careers as the UK gets back to business.”

“With furlough naturally unwinding and coming to a close at the end of the month we are doubling down on our Plan for Jobs – focusing our support on giving people the skills and opportunities they need to succeed in the jobs of tomorrow.”

Furlough rates diverge by industry, reflecting differences in the scale of the hit the Covid crisis has inflicted on various sectors of the economy.

Furlough rates are highest in the air transport sector, largely driven by restrictions on international travel still keeping a lid on demand.

Martin Chalk, acting general secretary of BALPA, said: “These statistics make it clear air transport is still right in the grip of the Covid crisis. UK Government and global restrictions mean that while other sectors have been able to get up and running, aviation is still essentially in lockdown.”

Businesses still struggling to fill roles

Despite the upbeat furlough figures, data released by the Recruitment and Employment and Confederation and KPMG today shows the volume of candidates available to start a job plummeted at its fastest rate on record in August.

Meanwhile, figures published by the Office for National Statistics reveal the scale of skills shortages businesses are struggling with when recruiting for roles.

67 per cent of firms are finding vacancies hard to fill due to a paucity of suitable applicants. Skills shortages were most acute in the professional and scientific sectors, the ONS said.

Difficulties filling vacancies was highest in the food and accommodation sector, with nearly one in three firms struggling to find staff compared to normal seasonal trends.

A quarter of businesses said reduced supply of EU workers was making it harder to source workers, while 15 per cent admitted they cannot afford to offer salary incentives to attract talent.

Yesterday, governor of the Bank of England, Andrew Bailey, warned inflation could prove stickier than the central bank expects if worker shortages fail to clear. According to the ONS, inflation currently stands at two per cent annually, but the Bank expects it to rise to four per cent by the end of the year.

Latest data from IHS Markit shows the services, construction and manufacturing industries are struggling to scale supply amid capacity constraints caused by a chronic lack of workers and raw materials.