Unemployment in the UK is now at its highest level in more than 3 years. The worldwide pandemic continues to impact all countries indiscriminately. Why then is their a wider gender imbalance poking through the latest statistics?
From National To Local Warning Systems
The UK government has begun the next phase of imposing tighter local restrictions. This is being done via the introduction of a three tier system for local lock-down and is aimed to simplify things across the board. This system will categorise different parts of the UK with different levels to help combat the spread of Covid-19 at a more local level.
Covid-19 as we know, has already had a significant and direct impact on businesses and jobs. The national enforced lockdown in previous months caused otherwise healthy businesses to close and subsequently bought with it a swathe of job losses.
With the looming local restrictions coming into place, the knock on effect of the tighter constraints will further exacerbate the UK unemployment crisis but this time on a regional basis. This raises many questions.
UK Unemployment stats bleak and seemingly hitting certain segments of society hardest
With the unemployment rate rising from 4.1% to 4.5% in the last quarter, approximately 1.5 million people find themselves out of work. Redundancy levels have hit a high not seen since 2009 during the aftermath of the financial crisis. With 227,000 redundancies between the months of June and August 2020, UK earning stability is in a rather precarious position.
Young people in the age group from 16-24 have been greatly impacted, moreso than other age groups. Some of the main sectors that have shouldered the burden have been travel, hospitality and leisure, all stumbling under the greater social distancing restrictions. This has had a knock on effect on the amount of people claiming work related benefits with that number increasing by more than 1 million since March 2020.
There has also been a disparity between unemployment levels between men and women with the number of men being employed increased by 22,000 whilst the number of women has decreased by 34,000 (ONS). There could be many different reasons for this difference, but the onus of unpaid care, which is disproportionately placed on women could account for the stark difference in numbers.
Time will tell, as children begin to return to school after the longest summer break in memory, whether this disparity is closed. It seems that even viruses have the potential to cause societal imbalances.
Worse Before It Gets Better?
It seems as though this will continue unabaited for a while at least. Unemployment is expected to rise further with the changes to the government’s furlough scheme. The furlough scheme has been subsidising wages up to 80% to discourage employers making job cuts. This has saved countless jobs.
This version of the scheme will be phased out and replaced with a new scheme which is expected to begin in November 2020. The new scheme is going to be less generous than the previous furlough scheme.
The beginning of November therefore could see a further sharp increase in unemployment and job losses as companies’ struggle to foot the bill for the staff with a reduced level of support.
With the introduction of the new tier system in the UK, if these tighter restrictions are then required in specific areas, one can expect the local, and wider UK unemployment figures to follow the trend seen elsewhere.
It appears that the worst is still not over, and that the UK is heading into a deeper phase of unemployment with a long and hard road to full recovery. There has been a similar trend of unemployment worldwide as the Covid-19 pandemic continues to ravage the worldwide economic scene.
As inroads are being made towards a vaccine, what of the currency impacts?
All is not lost, further inroads are made towards a vaccine at a record pace. Despite reductions, there is still, by and large record amounts of support being provided by governments around the globe.
If the unemployment figures and economic statistics start to vary significantly between regions, you can expect to see some significant volatility moving into the related currency pairs.
GBP is in a very precarious period at the moment and is certainly fair to say there is volatility on the cards. With the Brexit deadline looming, and the two sides no closer it seems to an agreement, unemployment statistics like those seen above will be the last thing the government will want to see.
USD is going through the usual pre-election wobbles, as traders seemingly keep their cards a little tighter to their chests. Volatility can be expected here especially as we also enter the next earnings round.
2020 truly is looking like a year for the history books, with a little fortune shining on us, it may yet end with a silver lining if we can pick the right side of the volatility line.