The UK labour market has shed almost 700,000 jobs since the start of the coronavirus lockdown, and more than 5m workers were still temporarily away from work even after the hospitality sector reopened in July, official data showed on Tuesday.

The number of employees on companies’ payrolls was down by around 695,000 in August compared with March 2020, the Office for National Statistics said. This was better than the payroll figures from a month earlier, which had shown a drop of almost 750,000, but suggests that hiring as the lockdown eased has gone only a small way to repair the loss of jobs since March.

Rising redundancies pushed the unemployment rate up to 4.1 per cent in the three months to July, the ONS said — in line with analysts’ expectations. It estimated that more than 5m people — including furloughed workers — were still temporarily away from work in July, half of whom had been away for more than three months.

There was little change in the employment rate, which was 0.1 percentage points up on the quarter at 76.5 per cent, and 0.4 percentage points higher than a year earlier.

Young people is the only group that has seen a clear drop in employment, with a record decrease of 146,000 for those aged 18 to 24, the ONS said.

However, figures for the period up to July will not capture job losses that have happened since employers had to start contributing to the costs of furloughed workers at the start of August. Most economists believe the picture will have worsened significantly since then.

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Paul Dales, at the consultancy Capital Economics, said: “It’s encouraging that the first step in unwinding the furlough scheme has not led to a surge in job losses, but we think it is only a matter of time before that happens.”



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